There’s a Major Change to Mortgages Coming This Summer

Source: Yahoo Finance

Fannie Mae announced back in October that it wants to simplify the mortgage lending process for lenders and borrowers alike. Those changes are about to take effect, so here’s a quick brush-up on what to expect as you begin the mortgage approval process.

The mortgage giant has been steadily working toward widening lending standards in a stringent mortgage market. It previously launched HomeReady, a home loan program that lets low-income borrowers, among other things, include incomes from consumers who will be living in the home but not on the loan (such as a parent) to meet underwriting requirements.

Fannie Mae now plans to permit lenders to use verified employment and income information and trended credit card data supplied by the credit bureau Equifax in its underwriting processes.

That means that prospective homebuyers may no longer have to submit pay stubs when they apply for a home loan — a longstanding requirement of mortgage lenders. It also means consumers previously shut out of the housing market due to thin or so-so credit files may be able to get approved for a mortgage through the use of alternative data.