Complaints from lenders about a new Fannie Mae policy that requires lenders to secure a borrower’s “refreshed” credit report just prior to a home purchase has resulted in the lending giant pulling the new rule from its website.
According to a Washington Post report, Fannie Mae introduced a new policy this summer that “encourages” lenders to retrieve a borrower’s updated credit report just before a loan closes to see if the borrower has taken on extra debt since applying for the loan.
Lenders say the new policy creates logistical nightmares and could trip up home purchases at a time when consumers and investors are showing more confidence in the U.S. housing market.
In response, Fannie Mae says it is reviewing the policy, which it has removed from its website, and will offer additional guidance by the end of July. Fannie said it was never its intent to tell lenders they were required to perform the additional credit check on all loans, just a suggestion on a “tool they could use”.
The Post story noted that until Fannie Mae clarifies its position on “refreshed reports”, lenders are nervous about the potential consequences, including delays that could prove costly to buyers, especially if they are purchasing foreclosures or participating in a short sale. Those types of purchase contracts can carry harsh penalties for late closings.