mortgage credit sure to continue contracting

Fannie Mae continues to restrict borrowers leveraging up on homes. Caps on debt to income and LTV. http://www.housingwire.com/2010/04/30/fannie-modifies-criteria-for-purchase-and-securitization-of-arms/ For ARMs with initial periods of 5 years or less, Fannie Mae will require that borrowers be qualified at the greater of the note rate plus 2 percent or the fully indexed rate (index plus margin).... [more]

Fannie Mae continues to restrict borrowers leveraging up on homes. Caps on debt to income and LTV. http://www.housingwire.com/2010/04/30/fannie-modifies-criteria-for-purchase-and-securitization-of-arms/ For ARMs with initial periods of 5 years or less, Fannie Mae will require that borrowers be qualified at the greater of the note rate plus 2 percent or the fully indexed rate (index plus margin). All loans not meeting the new guidelines must be purchased as whole loans on or before August 31, 2010, or delivered into MBS pools with issue dates on or before August 1, 2010. Fannie is also going to change criteria on interest-only loan products, capped at 70% loan-to-value ratio with the borrower FICO at 720 or higher. Balloon mortgages will no longer be eligible under the new guidelines. [less]