It’s a different time for loans these days!
Recently buyers have been turned down for their loan at the last minute because of a change in their credit score. Be careful, pay your bills on time and don’t make any new purchases before closing. It could cost you your new house and earnest money.
LOAN QUALITY INITIATIVE
FANNIE MAE REQUIRES CREDIT TO BE REPULLED PRIOR TO CLOSING
Fannie Mae requires that lenders re-pull credit on all mortgage application
submitted beginning June 1, 2010. This is to verify that borrowers have not
taken on new debt during the underwriting phase of the mortgage.
If new debts are found, the mortgage is subject to a
re-underwrite and a possible turndown.
Even if your loan has been fully approved, the re-pulled credit will validate:
Current Debits – additional credit or increased balances that change
debit-to-income ratios more than 2% will require the loan to be
suspended and re-submitted to underwriting.
Credit Score – if the FICO has dropped below minimum lending
standards, the loan may be denied subject to a new loan-level pricing
adjustment. Loan level pricing adjustments are mandatory loan fees
based on your credit score.
Credit Inquiry – has applicant applied for credit elsewhere? Any and
all inquires from other lenders or credit suppliers must be verified
that no new debit was opened. New debit must be included in the
borrower’s ratios and loan must be re-underwritten.
The Loan Quality Initiative improves Fannie Mae’s loan pools for selling to
the secondary markets. Unfortunately, it’ll mean more loan denials for
mortgage applicants.
It is important for homebuyers to take extra care of
their credit between the time of application and the
time of closing.
A supposedly cleared-to-close loan
can be revoked at the eleventh hour.
