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!