WOW! Get ready for this one...effective June 1st, Fannie Mae will now require that a second credit report be pulled prior to closing on all home transactions (refinances and purchases).
I understand that Fannie Mae had a lot, and I mean a lot, of losses over the past couple of years. However, the ramifications of this are going to send shock waves through the industry for several reasons:
1. Credit is always a moving target. You can have zero transactions on credit in a 30 day period and pull different scores. Loans must be underwritten off of exact credit scores. This means that if you started your loan with a 740 and end up with a 739 (yes one point), your loan has to go back to underwriting and closing will be delayed.
2. Borderline Deals: If you have a 680 credit score, which is the lowest you can have to obtain PMI, and at the end of the transaction you are a 679 you can say good bye to your loan, your earnest money, and the house.
It remains to be seen exactly how this will be handled in underwriting, but for now, DO NOT have any activity on ANY lines of credit once you apply for a loan application. More information to follow...
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