For better or worse, banks and lenders are becoming more lenient with what they are requiring from borrowers. It was only a year ago that most borrowers felt like they were being vetted to become a presidential candidate as they applied for home ownership. Instructors at the Praedo Institute have been joking with loan originators that they should learn how to draw blood, as that is certainly going to be the next required step in the application process and how they could expedite the process if they could draw blood themselves. However, the wind is starting to change direction in the market.
Fannie Mae is easing up on its requirements from borrowers to make home ownership easier in these difficult times. If you have been given the deed to your house back to the bank or done a short sale on a home, Fannie Mae regulations stated that you could not apply for a loan for four years. Fannie Mae is shortening that period to two two years. Cutting this length of time in half allows more borrowers to get back in the housing market.
The sentiment of such a change brings mixed feelings. Should forgiveness of such a magnitude be expedited or do we need more borrowers in the country in order to take up excess inventory? There are arguments that could be made on both sides. Certainly lenders are conscious of the fragile state of the housing market but executives at Fannie Mae feel that this is a move in the right direction. This expedited forgiveness also comes at a steep price, borrowers who wish to take advantage of the policy must put down a 20% down payment.
For better or worse, no one can argue that these types of changes coming form Fannie Mae are a positive thing for the housing market and urges us to be optimistic for the future of the housing market.
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