New Mortgage Requirement for Loans Sold in the Secondary Market

Effective June 1, 2010, Fannie Mae and other investors have increased the requirements for a salable loan. Going forward:

1) Lenders are responsible for verifying the borrower's social security number.

2) Lenders must obtain documentation from the borrower, confirming that the borrower intends to use the purchased residence as his primary residence.

3) On the day of closing, lenders must confirmt that the amount of debt borrower has, the borrower's payment history, and the borrower's credit score is reconciled with the information the borrower provided when applying.

4) Loans cannot be originated, underwritten, or serviced by companies or people that are on HUD's Limited Denial of Participation List, or on the General Services Administration Excluded Party List.

Keep in mind that this does not mean that a residential loan cannot be made if it does not meet these requirements. You can obtain a residential loan that does not meet these requirements if it is not sold on the secondary market. Unfortunately, those loans are few and far between!

Home Buyer Tax Credit Closing Deadline Extended!

Good news for those homebuyers who were eligible for the home buyer tax credit but could not close by June 30, 2010! If you were unable to close by the deadline, you now have until September 30, 2010 to close your real estate purchase. Because of the backlog of mortgages, Congress decided to extend the deadline for closing.

Keep in mind, if you did not enter into a real estate contract by April 30, 2010, this extension will not help you. The extension is only for those who had a valid, binding real estate contract as of April 30, 2010.

Also, you must be otherwise eligible for the tax credit. In order to qualify for the first-time buyers credit of up to $8,000, you must not have owned a home in the last three years. For the existing homebuyer credit of up to $6,500, you must have owned your home for at least the last five years. Furthermore, the home must be your principal residence, and must cost less than $800,000. Vacation homes are ineligible for the credit. There are income restrictions also. Speak to your accountant and make sure you are eligible!