[Loan Doctor]

Following are the most important things that are being noticed with the new changes to the AUS (Automated Underwriting System)

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Recently FNMA announced changes to the Conventional Conforming Fixed and ARM product guidelines. Please refer to the FNMA website for details.

The following guidelines are affected:

Foreclosure Policy

Fannie Mae is increasing the time period that must have elapsed following a foreclosure to 5 years before they will consider the borrower to have a re-established credit history. FNMA will continue to allow a lesser time period (3 years in lieu of the current 2 year requirement) for borrowers who can demonstrate documented extenuating circumstances that resulted in the foreclosure action.

(The elapsed time is determined by comparing the application date to the
completion date of the foreclosure.)

Excessive Mortgage Delinquencies

Loans with excessive prior mortgage delinquencies will not be eligible for delivery to Fannie Mae. Excessive prior mortgage delinquency is defined as any mortgage trade line that has one or more 60, 90, 120, or 150-day delinquency reported within the 12 months prior to the credit report date.

Authorized User Accounts Clarification

If the lender has information available to determine that the applicant is the authorized user of a trade line belonging to the applicants spouse, and the spouse is not an applicant in the transaction, the authorized user trade line must be considered for underwriting purposes.

[roybean]

Isn't FM kin to Sallie Mae?

[Loan Doctor]

FannieMae and FreddieMac are quasi-government agencies dedicated to packaging mortgage's so they can be sold on Wall Street. SallieMae is the same type corporation that packages student loans, one major difference being that they also service loans. The underlying loans being sold, but they continue to do the servicing.

If you ever see a comment in a financial story about GNMA that relates to the FHA loan pools that are packaged and sold on Wall Street.

Funny story on NPR this morning is that Wall Street evidently sold more than half of the "toxic" subprime loans to the Europeans as their losses at this point are an admitted 34 BILLION more than the US ones.

Lastly, and on my soap box, the bond rating agencies-Standard & Poors, Moody's, etc, are getting their heads slapped over their misrepresentation and lack of knowing wht they were doing when they rated Mortgage Backed Securies that were sub-prime the same as the ones that were prime. But that is all. It is sort like they are saying that the investors should have known something was up when certian pools were yielding lots more than others. DUH, more risk....

Charles

[Hedwig]

But you know, some people can never get the relationship between risk and reward. They want "safe" investments that yield 20%. There is no such critter. If you want the reward, you need to accept the risk.