• CMG MORTGAGE, INC. NMLS #1820

Major Lending Changes Impact Mortgage Market

  • July 18, 2017

Changes from the three major credit rating agencies, Fannie Mae, and Freddie Mac will impact mortgage lending and the ability for borrowers to secure loans.  Equifax, TransUnion, and Experian announced they will drop tax liens and civil judgements from consumer profiles when the information is not complete.  Fannie Mae and Freddie Mac are raising their debt-to-income ratio limit to allow borrowers with higher levels of debt to qualify for conventional mortgage financing.

Approximately 7% of the 220 million Americans with a credit profile have tax liens or civil judgments against them.  A potential borrower with a tax lien or civil judgement is considered a significant risk.  When the tax lien or civil judgment is incomplete, missing the person’s name address, date of birth, or social security number, this can lead to misrepresentations or mistakes, dropping the FICO score by 20 or more points.

The potential borrower’s debt-to-income ratio also influences their ability to secure a loan and a favorable rate.  By raising the debt-to-income ratio limits, Fannie Mae and Freddie Mac help potential borrowers who may have high levels of student debt making it harder to obtain financing.  Fannie Mae Chief Economist Doug Duncan does not believe this action will pose a risk, stating, “given how pristine credit has been post-crisis, we don't feel that is an unreasonable risk to take." 

Since the Financial Crisis, the housing market has recovered and strengthened with low rates and conservative lending restrictions.  As Americans’ borrowing and spending habits improve, easing credit standards may help increase mortgage market activity. 

 

Sources: CNBC

Mark Neely
Senior Loan Officer
NMLS # 489379
Branch NMLS # 1093019


Mark Neely

PHONE: (615) 567-8882
mneely@cmgfi.com

APPLY NOW MY VIDEO
CMG Image
© CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender with corporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; and Licensed by the Virginia State Corporation Commission #MC-5521. CMG Mortgage, Inc. is licensed in all 50 states and the District of Columbia. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/licensing and NMLS Consumer Access (www.nmlsconsumeraccess.org).