Tuesday, December 14, 2010

New Credit Rule

There is a new underwriting regulation for Fannie Mae (non-government) loans that is important to know.

If a borrower pays off a revolving debt (like a credit card) to qualify for a loan, the borrower must close that account before closing or at closing. If they don't close the account, the debt must be counted against them when calculating the debt-to-income ratio, even if the balance is zero.

If the account is paid off but not closed, the balance that showed on the first credit report that was pulled by the lender must be used. Pulling a new credit report to show the balance as zero is not allowed.

This is one of those underwriting guidelines that most lenders will not know about because most lenders do not read the underwriting guideline updates every day. If your lender doesn't read the updates and your deal falls apart, dump the bum and start using a good lender who reads.

Want to make sure your loans close? Call the Mortgage Experts at 303-345-3683.

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