Mortgage Daily Logo
mortgage news from industry experts

Fannie Revises Min Credit Scores, Max LTVs

Fannie Revises Min Credit Scores, Max LTVs580 score required as of June 1

April 2, 2008


Fannie Mae this week tightened its credit score requirements and made it harder for borrowers with prior foreclosures to qualify for conforming mortgages.

In a letter to approved sellers, the Washington, D.C.-based company said it took steps to align manual underwriting with Desktop Underwriter 7.0. In addition, DU risk assessment was updated, and pricing was modified.

The changes take effect on loans underwritten June 1 or later, according to the secondary lender. Whole loans underwritten based on the old criteria must be purchased by Fannie no later than Oct. 31 or delivered to mortgage-backed securities pools by Oct. 1.

Fannie said it has established a minimum credit score of 580. Prior to this requirement, no minimum credit was required for manually underwritten loans.

Credit score exceptions can be considered for some streamline refinances, government-insured loans and manually underwritten loans with non-traditional credit.

“The dramatic shifts in market dynamics over the past several months have prompted us to continually review the full spectrum of our risk appetite, eligibility requirements, automated underwriting risk assessment and pricing,” Fannie stated. “In some instances, the changes are a contraction of our current policy, but in other cases, the changes represent an expansion of our eligibility guidelines.”

Streamlined refinances have no minimum credit score requirements for “Option A” and “Option A Select.”

Two-unit properties require a score of at least 640, while three- and four-unit properties require a 680 score, the government sponsored enterprise said.

Fannie said it would increase from four to five the number of years that must elapse since a foreclosure before the borrower is considered to have re-established credit history. With extenuating circumstances, a three-year period is required. A minimum down payment of 10 percent and a minimum credit score of 680 are required with prior foreclosures.

Borrowers with a 60-day delinquency on the mortgage during the prior 12 months will be ineligible for a conforming loans, Fannie clarified. Authorized user accounts will not be considered unless the primary account holder is the borrower’s spouse.

Loan-to-values on manually underwritten loans have been reduced for all three- and four-unit properties, second homes and some streamlined refinances, according to the letter. The maximum LTV on MyCommunityMortgage loans was lowered to 97 percent for traditional credit borrowers. Borrowers with non-traditional credit are limited to 95 percent LTV and combined LTV, though eligible Community Seconds will still go to 105 percent CLTV.

On Friday, Fannie issued an update indicating it would extend the maximum months in forebearance from four to six.

The complete letter is online at:

Fannie Mae profile

next story

back to current headlines

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts