Fannie Mae Guidelines Changes Coming Up

It’s funny because I was just thinking to myself the other day that if they loosened the guidelines for those who have had foreclosures and short sales a little more it could help correct the housing marketing.  I am sure many do not what to hear this but the fact of the matter is people are human and make mistakes.  Many have learned from this housing downturn and will making much smarter financinal decisions, smarter than they ever have before, going forward.  Also, because lots of time the consumer has a lack of self control the banks need to put rules in place so someone isn’t able to overextend theirself. 

Well, Fannie Mae just released that they are extending the waiting period that must elapse after a borrower experiences a foreclosure to 7 years from 4 years.  Fannie goes onto say that if there are extenuating circumstances you can follow their new rules but it will be a manual underwrite which in general means stricter rules. 

On a positive note, Fannie Mae is decreasing their maximum debt to income ratio down to 45% from 50%.  This is a good thing because you shouldn’t be any higher than that and really shouldn’t even be that high but there are different circumstances that can allow for higher ratios especially with compensating factors such as high credit scores, assets, etc.