Borrowers are in “financal purgatory” util one minute AFTER closing because Fannie just announced that mortgage loans may have to re-underwritten if the back end ratio exceeds 45% OR (yes, it’s an OR) the back end ratio increases by 3% (or more) from the original ratio.
Yeah, what that means is that even if they had a 38% total debt-to-income ratio, they added new debt (or income was reduced for some reason), and the new ratio is 41%, the new loan/loss of income must be documented and the loan must be re-underwritten prior to closing.
While this “officially” does not go into effect until 12-1-10, Fannie wants lenders to start implementing now. Consider being pro-active and warn your clients not to spend one single dime–or at least let you know if any, and I mean any, changes to their income or debt.
