On April 30, 2010, Fannie Mae announced new standards for the purchase and securitization of adjustable-rate mortgage (ARM) products and a change to the qualification criteria for interest-only loan products.
Fannie Mae changed eligibility criteria to protect consumers from payment increases and assist borrowers who hold these types of mortgages to sustain them beyond the initial interest rate period.
If you have any questions with regard to bankruptcy or foreclosures, please contact our office at 1-800-303-2964. Rinne Legal is located at 1990 North California Blvd., Walnut Creek, California 94596, with additional offices in Fairfield, Oakland, and Sacramento. Rinne Legal offers free initial consultations.
The press release said that for ARMs with initial periods of 5 years or less, Fannie Mae requires borrowers be qualified at the greater of the note rate plus 2 percent or the fully indexed rate (index plus margin).
According to the announcement from Fannie Mae, for an interest-only loan product, the maximum loan-to-value ratio cannot exceed 70 percent, the borrower's credit score must be 720 or higher and the borrower must have a minimum of 24 months of liquid asset reserves remaining after loan closing. Balloon mortgages, which are mortgages with small periodic payments until the completion of the term, at which time the balance is due as a single lump-sum payment, will no longer be eligible, except with special approval.
If you have any questions with regard to bankruptcy or foreclosures, please contact our office at 1-800-303-2964. Rinne Legal is located at 1990 North California Blvd., Walnut Creek, California 94596, with additional offices in Fairfield, Oakland, and Sacramento. Rinne Legal offers free initial consultations.
