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Fannie Mae Reviewing Last Minute Credit Checks

July 21, 2010

This has been something that has really been irking lenders, Realtors, buyers and sellers alike.  Earlier in the year, Fannie Mae started requiring lenders to pull a second credit check right before allowing a buyer to close on a property.  The goal of this was to identify new debt that had been taken on by the borrower that might make it harder for an applicant to afford their mortgage, or may mess up their debt to income ratio, etc.  The search can even uncover short term debt like medical bills which insurance is likely to cover…things like this can totally derail a purchase/loan.  As a Realtor, I always advise my clients that once they get under contract on a property, DO NOT OPEN ANY NEW LINES OF CREDIT!!  Also, don’t close existing lines.  Don’t get that Kohl’s card to save the 10%.  Don’t do ANYTHING whatsoever that will affect your credit.  Unfortunately, sometimes these things are unavoidable, particularly the medical bill thing I mentioned above.  The thing that stinks about that is most people don’t understand the credit system in America.  Luckily, Fannie Mae is revisiting these new requirements and may possibly eliminate it.

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