Fannie Mae announced that they have eliminated the Anti-Buy-and-Bail rule, the underwriting guideline that has held back so many move-up buyers.
The previous rule meant that buyers who already owned a property had to have at least 30% equity in it; other wise they would have to qualify using both their existing payment and new proposed payment in the equation.
MND details the change here, along with a few others:
http://www.mortgagenewsdaily.com/07012015_fannie_mae_selling_guide.asp
Now a buyer can produce a rental agreement for their existing house, and not have that mortgage payment count in their qualifying equation!
This is the key element that spurred the last few years of the previous boom, as buyers would finance most (if not all) of their non-contingent purchase, and then go back and sell their old house later.
Now they might keep it as a rental, or sell it at some point after they move.
The Anti-Buy-and-Bail rule forced them to sell first, and was probably one of the main reasons we’ve had so many potential sellers be reluctant lately – they couldn’t qualify for both, which forces them to consider selling first and risk the double move!
In an unrelated event, I just re-upped my domain, www.doublebubbleinfo.com!
do you get to star in any Go-Daddy commercials?
Now if the “new” regulations over at Fannie Mae wouldn’t penalize those who have investment income which means a 25% DP, I’d be happier. Doesn’t a “perfect” FICO and near 30-year credit history mean anything? I’m actually approved for more than I was nearly five years ago.
*Sigh* It’s not like I’m going to suddenly do a U-turn, act crazy and not pay my mortgage every month. Responsibility is the only thing I know. You’d think a 20% DP on an upscale house would seal the deal, but oh nooooo…