Fannie Mae: Ability to Repay is Important Lending Criteria

Fannie Mae is making it clear to its underwriters that a homeowner’s ability and willingness to repay is of primary concern in approving loans.  All debts, including the proposed loan, must be disclosed and considered in awarding a loan.  If there are changes that occur during loan origination, Fannie Mae expects underwriters to find out about it.

Fannie Mae insists that its new requirement does not imply that a second credit check will always be pulled.  New underwriting will only be required if new information from the borrower is discovered that makes the debt-to-income ratio go above 45% or to increase by 3% or more.  The guidelines are leading to lower default rates, according to Fannie Mae executives.