Fannie Mae and Freddie Mac Changes May Boost the Market

The housing market is expected to undergo significant changes in 2023 due to new mortgage financing policies from Fannie Mae and Freddie Mac. These updated policies, which will begin in late spring of that year, aim to make it easier for people with lower credit scores or incomes to get loans. Additionally, these changes also involve criteria that can help potential borrowers build their credit by using bank statements to assess income and balance trends as well as giving lenders more options when verifying nontraditional sources of credit. With all this being said, we look forward to seeing how these changes play out come late spring 2023!

The Loan Level Price Adjustments (LLPAs) are based on various factors, including the borrower's credit score and debt-to-income ratio (DTI). Additionally, there may be other factors considered as well. This message is in English language.

The updated policies regarding LLPAs will decrease the expenses associated with having a lower credit score. However, there will still be a difference in costs between individuals with lower and higher credit scores, but it won't be as severe.

Starting on May 1, 2023, loans guaranteed by Fannie Mae or Freddie Mac will have new changes in effect. Although these changes will apply to the majority of loans in the United States, some loans like VA loans or "jumbo loans" from credit unions will remain exempt from these changes.

This announcement follows a previous announcement made earlier this week about changes being made to Fannie Mae's automated underwriting system. The changes involve new criteria for potential borrowers who want to build their credit, using bank statements to assess borrowers' income and balance trends, and giving lenders the option to use an automated system for verifying nontraditional credit sources.

The changes being made aim to help people who have trouble getting loans by making financing more accessible, including giving LLPA waivers to first-time home buyers who earn 100% or less of the Area Median Income. These new policies will begin in late spring and could potentially boost the sluggish housing market.

Overall, the new mortgage financing policies from Fannie Mae and Freddie Mac are expected to have a positive impact on the housing market in 2023. These changes will make it easier for people with lower credit scores or incomes to get loans, which could potentially increase home sales and help boost the sluggish housing market.

Additionally, these updated policies also involve criteria that can help potential borrowers build their credit by using bank statements to assess income and balance trends as well as giving lenders more options when verifying nontraditional sources of credit. With all this being said, we look forward to seeing how these changes play out come late spring 2023!

4-26-2023