Fannie Mae Loan Quality Initiative
Fannie Mae (FNMA) released an update earlier this month that will make committing loan fraud even tougher. Under the new guidelines, lenders will be required to dig a little deeper when verifying a borrowers identity, credit information and occupancy of the subject property.
Following is a summary of the changes that will impact most of us:
- Verification of each borrowers Social Security Number
Lenders must now verify each borrowers Social Security number with the Social Security Administration (SSA). If your SSN can’t be verified with the SSA your loan won’t be eligible for a Fannie Mae loan. - Verification that all parties involved in the transaction are not on “the list”
Lenders must now verify for every transaction that all parties (Lender, Loan Officer, Real Estate Agent, Real Estate Company, Appraiser and Appraisal Company) are NOT on the HUD or GSA excluded list. Offenders are essentially being removed from participation in any part of the transaction. - Occupancy Verification
Borrowers with multiple properties and/or conflicting addresses will be required to provide sufficient documentation to justify the new transaction. This has been a particular issue in instances where a borrower is purchasing as a primary residence a property with lesser value than the current residence. - Undisclosed Liabilities
All credit inquiries UP TO THE DAY OF CLOSING must be addressed and all debts must be disclosed on the final application. Borrowers that apply for other credit during the loan process (for example to buy appliances) will most certainly face closing delays.
It is fully expected that these measures will be adopted industry wide to include other loan types. Borrowers should be forwarned that the government is putting significant pressure on lenders to report instances of fraud to the appropriate authority. Omission of a material fact is fraud.
Implementation of the new guidelines will occur over the next several months.
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