San Diego Home Mortgage December Changes part 2By
NOV 30 2009
Besides the DTI changes to qualify for a conventional San Diego mortgage loan that I went over last week there are some other major changes being imposed by Fannie Mae on December 8th that will affect many people looking for a San Diego Home Mortgage.
If you have had a Bankruptcy, Foreclosure or Deed in Lieu of Foreclosure after the change it will be harder to qualify for a San Diego home mortgage.
The Fannie Mae Desktop Underwriter will be updated and will affect any applicant of a San Diego home mortgage that has had a Foreclosure with a completion date more than 5 years ago but less than 7 years. Starting with the December 8th update the minimum credit score will be a 680 FICO with a maximum of 10% down (but good luck finding MI coverage). The purchase of a second home or investment property will not be permitted and there will be NO cash out refinance transactions for any property type.
For the San Diego home mortgage applicant with a bankruptcy the rules will also change. If an applicant has a Chapter 13 that was discharged within the last 24 months , dismissed in the last 48 months, or filed but not discharged or dismissed in the last 48 months will get a “Refer with Caution IV” recommendation. This is an approval level that no lender is honoring.
If the applicant of the San Diego home mortgage has had a non-Chapter 13 bankruptcy that has been filed, dismissed or discharged in the last 48 months the application will get the same refer with caution recommendation.
Some other changes that will apply to people looking for a San Diego home mortgage are:
An IRS 4506-T form will have to be completed for every loan at the time of the application and the closing. This is an IRS form that will let the mortgage company get a transcript of the applicants taxes directly from the IRS in addition to the copy of taxes that we have to get as part of the application process.
Verbal Verification of Employment will have to be done 10 days before the note date on every non self employed borrower for every mortgage being sold to Fannie Mae.
Reserve requirements for investment properties and second homes will also be changed. When getting a home mortgage for a second home the reserves have been lowered to only 2 months but on and investment property it has been increased to 6 months. Retirement accounts can now be used as reserves but only at 60 percent of current face value of those accounts.
These are a few of the many underwriting changes in the mortgage industry so it is more important than ever to work with a seasoned mortgage professional. If you have any mortgage questions or would like to pre qualify for a new San Diego home mortgage give me a call at 619-285-2921. You can also click here to pre-qualify now.