New Rules Have Lenders Checking Credit Reports the Day of Closing

As of June 1, mortgage lenders began re-pulling credit reports of borrowers just before a loan closes. Lenders are looking to make sure the applicant has not incurred any new debt prior to closing the loan. The change in procedure is part of Fannie Mae's Loan Quality Initiative (LQI). The LQI encompasses many aspects of mortgage underwriting. Basically, FHA as well as Fannie and Freddie are making an all out effort to improve their loan quality for mortgage backed securities.
Why check credit? When someone buys a home, they also find themselves in the market for a new refrigerator, washer/dryer,  furniture ,ect. .                                                                                                                     Search Homes
  
Sometimes these purchases are financed with credit cards. When this happens the balance of the applicants credit card rises which will change their monthly payment and possibly their credit score. The already approved loan will have to go back to the underwriter to make sure they still qualify with the higher debt. Sometimes purchases for furniture and appliances are financed with a store credit card, or "12 months same-as-cash." These are still debts that show up on a credit report and may impact qualifying.
None of us want to find out the day of closing that a previously approved applicant no longer qualifies because they went on a shopping spree. Please advise your homebuyers that they should not be making any purchases with credit or acquiring any debt before their mortgage closes.
Dan Shaw,  People's Mortgage Company

if you are looking for that 2nd home call Linda Wieczorek AZhomes4u@gmail.com