Fannie Mae to update HomeReady income limits and Desktop Underwriter eligibility assessment
As a leading provider of liquidity to the housing finance industry, we work to improve the efficiency of the mortgage market and continue to provide access to mortgage financing in all markets at all times. We are committed to offering home finance options that meet market needs, while maintaining strong, sustainable credit standards that do not place undue risk on borrowers, taxpayers, or the housing finance system. In order to fulfill these objectives, we must balance a number of business goals and regulatory mandates related to returns, capital management, securities performance, and affordable housing goals.
As a result of certain regulatory and market developments, we are announcing changes to HomeReady Income Limits, which will apply to new loan casefiles submitted to DU on and after July 20, 2019, and to the DU eligibility assessment, which will result in certain new loan casefiles submitted to DU on or after July 20, 2019 receiving an “Ineligible” recommendation when multiple high-risk factors are present.
HomeReady Income Limits
Currently, to be eligible for a HomeReady loan, the borrowers’ total annual qualifying income may not exceed 100% of the area median income (AMI) for the property’s location and there is no income limit for properties located in low-income census tracts (those where the median income is not greater than 80% AMI). To better align with our housing goals, we are changing the income limit requirements for all HomeReady loans to not exceed 80% AMI for the property’s location. (This includes properties in low-income census tracts.)
DU Eligibility Assessment
As part of normal business operations, we regularly review DU to determine if its risk analysis and eligibility assessment are appropriate based on the current market environment and loan performance information. As a result of our most recent review, we will be updating the DU eligibility assessment to better align the mix of business delivered to Fannie Mae with the composition of business in the overall market. As a result, certain new loan casefiles will receive an Ineligible recommendation when multiple high-risk factors are present.
We believe these changes will better align to our affordable housing mission and result in a mix of business that better reflects the overall market.