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Changes to Freddie Mac Guidelines
July 31st, 2015 11:19 PM

Exciting Changes to Freddie Mac Guidelines!

Freddie Mac recently announced some exciting changes to their current policies and underwriting guidelines. These changes are considerably positive, to both industry professionals and consumers. Here are the changes that will have the biggest impact to you and your business:

Debt-to-income ratio calculation
Effective for loans closing on or after August 1, 2015, the minimum monthly payment amount that must be included in the debt-to-income ratio (“DTI”) calculation for deferred student loans will decrease from 2% to 1% of the outstanding balance.

Increase in Maximum Number of Financed Properties
Effective for loans closing on or after October 26, 2015, the maximum number of financed properties that a borrower may own or be obligated on, will increase from four (4) to six (6) when the transaction is for a second home or investment property (1-unit only). In addition, the maximum Loan-to-Value (LTV) for these purchase transactions will be 85% (mortgage insurance applies).

Rental Income
Effective for loans closing on or after October 26, 2015, Freddie Mac is removing their previous requirement that the borrower have a two-year history of managing investment properties, in order to use rental income for qualifying purposes.

Rent Loss Insurance
Effective for loans closing on or after October 26, 2015, Freddie Mac is removing their previous requirement that the borrower have at least six (6) months of rent loss insurance coverage, when using rental income from the subject investment property for qualifying purposes.

The removal of these restrictions will make a measurable difference in your homebuyers’ purchasing power, and lighten their burden of proving their creditworthiness.

USDA Upfront Guarantee Fee Increase

USDA Rural Development announced an increase to the upfront guarantee fee on Guaranteed Rural Housing (GRH) Loans from 2% to 2.75% beginning with Conditional Commitments issued on or after October 1, 2015. Fortunately, the annual fee is unchanged and will remain at .50%.

I hope this information gives you and your clients more opportunities to succeed in today’s housing market. If you have any further questions or would like to learn more, please do not hesitate to contact me!

Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,MRP,SFR on July 31st, 2015 11:19 PMPost a Comment

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