Updates to Fannie Mae Guidelines

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Last week, Fannie Mae released Selling Guide Announcement SEL-2017-04 with underwriting updates, including the special pricing for when home owners refinance their home to pay off student loans. Fannie Mae is the Federal National Mortgage Association and basically provides funding for conventional “conforming” loans.

Here are some of the other features that were announced in last week’s Selling Guide update.

Debts paid by others may not be factored into debt to income ratios. Fannie Mae is now allowing “non-mortgage debt” that is not being paid by the borrower to be excluded from debt-to-income (dti) ratios for qualifying for a mortgage. Documentation, such as cancelled checks, must be provided to show the debt has been paid by the other party for the last 12 months. This policy does not apply if the other party who has been paying the debt is an interested party to the transaction, such as the seller or real estate agent.

Properties listed for sale within the last six months restrictions removed for cash-out refinances. Previously to this update, if a home had been listed within the past six months, it was not eligible for a cash out refinance. This guideline has been updated to allow a home to be listed for sale as long as has been taken off the market on or before the disbursement date of the new mortgage. I imagine lenders may have underwriting overlays requiring that the listing be removed prior to application.

Condo Project Eligibility Review Waivers for Limited Cash-out Refinances. Fannie Mae is waiving the project eligibility review on condo’s when they own the existing loan that is being refinanced and if the loan to value is 80% or lower on the new first mortgage. The condominium project must have required insurance.

If you’re interested in refinancing or buying a home located anywhere in Washington state, I’m happy to help you! Click here if I can provide you with a no-hassle mortgage rate quote for your scenario.

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