Home : Fannie Mae Tightens Lending Standards

Fannie Mae Tightens Lending Standards

Posted by Tina Merritt on 11/30/2009 at 1:50 PM
Posted in Real Estate Investing

Blog Image Effective December 12, 2009, Fannie Mae begins implementing new, tightened lending standards.

Among the new guidelines, borrowers who are putting at least 20% down will need to have a minimum credit score of 620 (the current score is 580). The new cutoff for total debt cannot exceed 45% of borrower's monthly income.

Why the tightened standards? On average, loans to borrowers with less than a 620 credit score are approximately nine times more likely to go into default.

In the past, it has not been common practice to give a buyer's credit score on a lender's pre-approval letter. In light of these new guidelines, it may be a good idea to request the score (from a tri-merged credit report) be stated on the letter.

Tina Merritt is an 11 year veteran Real Estate Agent and Trainer based out of Virginia Beach, Virginia. She holds a degree in economics from Virginia Tech and post-baccalaureate from Virginia Commonwealth in real estate and land development. As an avid social networker and internet marketer, Tina helps real estate agents, loan officers and affiliated industries embrace technology. As a real estate agent, Tina primarily deals with marketing and selling properties deemed "hard to sell" and also works with real estate investors helping them build and/or liquidate their portfolios for maximum profit.

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3 Comments

Posted by user28112 on 12/01/2009 1:47 PM

Hi Terrific Tina. No doubt you and your family had a good Thanksgiving with much to give thanks for.

I was just thinking about the probable havoc credit card companies are doing to people’s credit scores with their capricious lowering of people’s credit limits causing some people to go over their credit limit. Even if the people do not go over their credit limit, the arbitrary decrease of the people’s credit limit will probably have a negative effect on their credit scores. A credit score of 620 is still somewhat low, but in these times of uncertainty, it can be high for many people due to no fault of their own.

Sincerely, your valiant friend and strong "Revolutionary Entrepreneur"
Nimrod (means "Valiant, Strong" in the Hebrew language)

Dr. Nimrod Erech M. Christ Nimrod,
President, Co-founder
Self-Esteem & World Peace Association
Nimrodworldpeace@aol.com.

Posted by member1798092 on 02/06/2010 5:49 PM

This new FHA rule makes perfect sense especially in the economic climate that most places around the county are still experiencing. Once the market improves and people are back on their feet maybe then could the scores be relaxed again.

Bill Gassett,
http://massrealestatevoice.com

Posted by member11000083 on 02/24/2010 9:26 PM

This seems like all good news for the rental market. I'd say a lot of potential homebuyers are off the market for good. I'd go further and say this is great news for residential investors as well.

Blake Ratcliff
Join the International Residential Real Estate Investors Association
www.irreia.org

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