New mortgage requirements

[Account Closed]

Just read an article that Fannie Mae has been doing a second credit check. This is obviously causing problems for some mortgages.

With the passage of the Financial reform legislation there will be a large number of changes regarding mortgages. Most of the changes haven't taken place yet because the agencies have been given a lot of latitude to make changes as they see fit.

How do you see this new law effecting real estate investors?

[J Scott]

With FHA, I believe the preliminary credit check is good for something like 60 or 90 days, after which it's pulled again. I've had a number of FHA buyers who couldn't close in the allotted time and ended up getting their credit pulled a second time.

After one of our buyers saw a score drop in that time period and could no longer qualify, we started telling all our borrowers, "Hey, they'll likely pull your credit before the close, so don't miss any payments."

While it wasn't true then, it is now. So, we'll keep telling buyers this so that they expect it and can ensure they don't do anything stupid.

We also remind them that the very last thing FHA will do is verify employment, as we had one stupid buyer who quit his job the week he was supposed to close on one of our houses...