Watching mortgage underwriting guidelines is a great way for determining the direction of housing. Personally I’ve been doing so since early 2006. Right now it is much easier to track underwriting for the whole market since there are basically 3 major guidelines, Fannie, Freddie and FHA. Some lenders will have more restrictive overlays over the top but in general reading about Fannie/Freddie/FHA guidelines will get you a great idea of what is going on.
That said, I don’t see any huge underwriting changes on the horizon, they’ve raised min ficos somewhat over time and reduced max DTI but (IMHO!) the vast majority of restrictive guidelines are in the past.
The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.
I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.
