Mortgage Underwriting Guidelines Will Tighten in 2007

Colorado was identified as the number one State in the Country for foreclosures; however, the foreclosure problem exists in most major markets across the Country and the Office of Federal Housing Enterprise Oversight is suggesting immediate action. The agency has issued a directive to Fannie Mae and Freddie Mac to tighten underwriting practices for several nontraditional mortgages. Both Fannie Mae and Freddie Mac operate under a unique public/private partnership as a quasi-governmental agencies.

The agencies are to follow the guidelines issued in October by federal bank regulators covering higher risk mortgages which allowed for deferred interest or principal payments such as MTA loans and other non-traditional mortgages.

Bottom Line: As mortgage lenders and secondary market makers feel the pinch from increased foreclosures, most lenders will either tighten guideline or in some cases no longer offer certain types of mortgage programs. This change placing added importance for consumers to seek the advice of a qualified mortgage consultant.