Do Loosening Guidelines Herald a Future Collapse?

In the lending world, the loosening of Fannie Mae’s underwriting guidelines have people talking as they think back to the 2008 credit/appraisal issues during the last mortgage downfall. The newly released guidelines from Fannie Mae do loosen their stance on certain credit elements including moving their max Debit-to-Income (DTI) ratio up to 50%, lessening income documentation requirements for self-employed and some smaller changes around how different kinds of debts and incomes are treated. Yet, they’re really not anything “new.”  Fannie Mae’s shifts just align its guidelines to that of its brother, Freddie Mac.

That being said, I do see small changes happening across the lending spectrum, that individually aren’t anything to worry about–but in aggregate could result in another mortgage situation if the trend continues. As new loan products are introduced, I would encourage all of us to advocate stable loan options with our clients that help them get into the properties they want without undue financial risk.

Waiting on Rate Shifts….Still Waiting!

There’s been noise for well over a year on bringing up interest rates but we’ve had pretty minimal movement so far. Honestly, with the domestic political environment it’s making it hard to predict what’s going to happen. While the economic data looks good, the markets don’t like it when they cannot make an educated guess around where to put their money. This makes the economic environment unsettled, which in turn makes the Fed hesitant to do anything too bold.  So…we’re still waiting!

Geoffrey Davis – Mortgage Loan Consultant 

NMLS #206192
First United Bank & Trust

D: 214-529-9622

F: 855-239-6079
6401 S. Custer Rd.

McKinney, TX 75070

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