Under the new rules your lender might be checking up on you up until the day you close – and that letter of approval may not be the last word on your loan.
Fannie Mae’s new Loan Quality Initiative, which took effect June 1, is part of the mortgage giant’s effort to improve loan quality and cut down on the kind of shoddy underwriting that helped crush the housing market, and ultimately make it unnecessary for there to be so many loan repurchases.
The new Loan Quality Initiative requires any lender that sells its mortgages to Fannie Mae to determine that borrower liabilities incurred up to, and concurrent with, closing are disclosed and evaluated in qualifying the borrower for the loan. But exactly how lenders go about doing this is up to them. In many cases, it will entail a “refreshed” credit report pulled immediately before a borrower’s closing date.
In simple terms, do not obtain new credit or make a big purchase before closing.
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