by Mike Colpitts 
Fannie Mae cuts mortgage eligibility requirements as the housing market enters the slowest time of the year in most of the nation.
- The government sponsored enterprise will no longer require a minimum 620 credit score to obtain a home mortgage.
- Home sales, however, are expected to pick up in the Fort Myers area as snowbirds return and buyers are searching for homes online more actively.
Fannie Mae, the nation’s largest buyer of home mortgages is cutting its mortgage eligibility requirements to allow more perspective buyers to qualify for a home loan. The government sponsored enterprise will no longer require a minimum 620 FICO score from borrowers.
Loans that are processed through its desktop underwriter system will now use its own risk analysis to determine if a borrower qualifies for a mortgage. The move is a major change for the mortgage provider as the housing market undergoes a major transition with a drop in home sales in the majority of the nation’s local housing markets.
“The DU risk assessment reflects a comprehensive evaluation of credit risk factors from the borrower’s credit report along with non-credit risk factors from the loan application,” Fannie Mae said.
Federal Housing Finance Agency director Bill Pulte said that as Fannie Mae cuts mortgage eligibility guidelines, the change gives lenders more flexibility in the types of scores that can be considered. “Big deal for consumers. Small or nothing deal for underwriting,” Pulte said. The move is a major transition for the nation’s housing market as it moves into what is typically the slowest time of the year for home sales.
However, home sales in the Fort Myers area usually pick up in November when the snowbirds return to the area to shop for property. Lower mortgage interest rates and a significant drop in housing prices in both the single family home market and condos in the region should spur more home buyers into making purchases.
The effort has its critics after the giant insurer of home mortgages made zero down mortgages a major part of its lending portfolio when the housing market crashed in 2008. The Trump Administration is in the process of instituting a series of changes in the nation’s mortgage lending system and has floated the idea of a 50-year fixed rate mortgage for lenders to capture more home buyers.
Fannie Mae also updated how its system handles borrowers with limited or no credit history. If a borrower has no reported credit, the system will flag the lender to document a nontraditional credit history and may even require homebuyer education.
Home buyers in Southwest Florida also have other options for down payment assistance and Zero down conventional programs. FHA mortgages may be obtained with as little as 3.5% down payments and a minimum credit score of 580.
As Fannie Mae cuts mortgage eligibility guidelines, the process is expected to open the mortgage market up to more borrowers, especially first time home buyers who are looking for a way into homeownership.