First the DAPs bit the dust, and now the ‘Anti-Buy-and-Bail’ program is kicking in.
In order to get a Fannie/Freddie mortgage, homebuyers who already own a house have to have at least 30% equity in it to qualify. If not, full PITI payments on BOTH houses get held against you when qualifying, and you have to have in the bank at closing at least six-month’s worth of payments on BOTH houses. No credit for renting the previous house, even if you have a rental agreement, which was the usual solution previously.
Countrywide now includes FHA loans in the same category.
A mortgage banker, and FHA expert, told me yesterday that they think that once the new housing bill gets implemented in October that all lenders will eventually incorporate the ‘Anti-Buy-and-Bail’ guidelines into both Fannie/Freddie and FHA underwriting.
Mortgages are being eliminated for these buyers:
1. Those who can’t/won’t document their income.
2. Those who document their income, but have too many write-offs to qualify.
3. Those with little or no money down.
4. Those who own the house they live in, but have low equity and not enough money left over once they make their bigger down payment on the house they want to buy.