Fannie Mae & maximum debt-to-income ratio.

User Forum Topic
Submitted by afx114 on November 10, 2009 - 11:27pm

On December 18th, Fannie Mae is instituting a maximum 45% debt-to-income ratio for all loans.

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0835.pdf (PDF)

Previously they would do upwards of 65%.

I'm curious to know piggie opinions on how this will affect the buyer pool, and how the shrinking of said pool will affect prices.

‹ Wells Fargo has reduced mortgage balances on 43,500 option ARM's and counting NORTH PARK (92104) SFAMILY HOMES NOW AT 2005 BUBBLE PRICING. ›
Note, that change was
Submitted by Effective Demand on November 11, 2009 - 12:03am.

Note, that change was implemented back in 2008. Also note DU can (and does from my observation) exceed that maximum. Also FHA is still extremely loose and there are discussions on the mortgage broker boards of exceeding 50%+ back end DTI.

I saw a discussion this week regarding Wells restricting DTI from 50% to 45% and Chase was coming out with another restriction (I believe it was min FICO related) which I can't remember right now. But as long as Uncle Sugar allows the loose underwriting and foisting the risk off on the taxpayer it won't matter much.