The Conservative Shift of Mortgage Lending
Wow! … You know the old saying that the more things change, the more they stay the same? That has been especially true with the changes to the secondary market (Freddie Mac and Fannie Mae) lending guidelines for residential mortgages.
We’re living with and through a very conservative shift in the secondary market’s credit requirements and a dramatic emphasis on the evaluation of a borrower’s income, assets and credit profile.
Some examples of what feels like an overly conservative swing in the underwriting evaluation would include a borrower’s need to address and explain any unusual deposits reflected on a bank statement (typically anything outside of what looks like a paycheck - explanations of deposits used to be limited to just large deposits but not anymore), obtaining written and verbal verification of employment several times during the processing of the loan even up to the day of closing, and explaining any and all credit inquiries on the credit report to ensure that no new debt has been incurred. (more…)
