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

Exceptional real estate investment in Phoenix, HOW bout that FHA buyer!!

Phoenix, Arizona is one of the lowest priced housing markets in the West, with exceptional real estate investment opportunities.

But..... How bout that FHA BUYER!!! or shall we call them discouraged qualified buyers.

Not only are we seeing 7-10 offers on every decent low priced REO property, but of those offers about 50% of them are all cash. This has become a problem for the First time FHA buyer, who are constantly losing out to these cash bids.

Trying to sell lender owned homes to FHA buyers can be very frustrating, very time consuming and an extremely long process. Most of the REO listing in the MLS will say they accept FHA financing but when they have other offers for either Cash or Conventional terms it seem like the FHA offer is on the bottom of the pile.

Hopefully as banks release more of their foreclosed properties and the competition lessens as we approach the holidays, sellers will again start looking at FHA buyers. It's a shame that so many will miss out on the $8000 tax credit, lets hope for an extension there.