Greenbook: A Local Guide to Chesapeake Living - Issue 3 | Page 42

Did Mortgages
Just Get Easier
to Obtain?
DAILY REAL ESTATE NEWS | TUES., DEC. 02, 2014

Fannie Mae and Freddie Mac's new
lending guidelines went into effect
Monday, which are expected to help
loosen up the tight credit standards
that home buyers and refinancers
have faced in recent years.
The guidelines clarify when lenders
will be penalized for making mistakes
on mortgages they sell to the mortgage financing giants. Following the
financial crisis, Fannie and Freddie

made it difficult for home buyers to
qualify for a mortgage.
Fannie and Freddie's latest lender
guidance is "going to be big, but it's
going to take time" to see the full
impact of the changes, Laurie
Goodman, director of the Housing
Finance Policy Center at the Urban
Institute, told The Wall Street
Journal. Earlier this year, the Urban
Institute estimated that up to 1.2
million additional home loans would
be made annually if mortgage
availability was at "normal" levels.
Lending giants such as Wells Fargo
and SunTrust Banks Inc. have said
borrowers will likely see faster
turnaround times on mortgage
applications in the next few weeks.
Some lenders also say they expect
to broaden the range of borrowers
they'll accept by reducing credit-score
requirements and making exceptions
for consumers who faced a one-time
financial event, such as a job loss or
large medical bill.

more clear cut," Mike Heid, president
of Wells Fargo Home Mortgage, told
the Journal.
However, some banks still are
treading cautiously and aren't ready
to relax their underwriting rules quite
yet.
"You won't see us start to expand our
criteria much past what we've done,"
says Brian Moynihan, Bank of
America chief executive. (Read more:
Bank of America: We’re Not Easing
Up)
U.S. Bank CEO Richard Davis says
his bank also isn't prepared to make
any changes yet.

"It's providing greater certainty for
all the parties so that you can lend
more confidently and make the whole
judgment process much easier and

forced banks to repurchase tens of
billions of dollars in loans that they
say did not meet their standards.
It caused many lenders to tighten
their lending, except to the most
creditworthy borrowers with the
highest credit scores. Lenders
have blamed the lack of clarity
from Fannie and Freddie on the
tight credit conditions that have

42

GREENBOOK | SEPTEMBER - OCTOBER 2014

"Unless we are convinced that the
rules are going to be permanent and
there is not going to be a look back
or a reach back in future times …
we are simply going to stay on the
sidelines in the concerns of both
compliance risks and other
uncertainties," Davis told the
Journal.