Fannie Mae: Last Minute Credit Report Pulling

Posted on June 07 By Justin McHood

In May, Fannie Mae announced that they would require multiple credit reports from borrowers when getting a loan that would be underwritten to FNMA standards.

And if you aren't careful, this new "last minute credit report pull" can delay or possibly even deny you being eligible for a loan.

When getting a FNMA conforming loan, lenders are now required to pull a "new" credit report on the day of closing and if any new accounts show up, then the loan will need to be re-underwritten taking the new information into account. This can delay your closing. Even worse, if an account suddenly shows up (say that you went out and bought a new car) it could disqualify you from being eligible because the new debt will be counted in your debt to income ratios.

So the general rule of thumb is this:

If you are in the process of getting a mortgage, be sure not to go open any new credit accounts during the process.

This has generally always been the case, but now with this new FNMA rule in place where lenders pull your credit report on the day of closing, there really isn't anything good that can come out of opening new accounts - it can only put your mortgage loan approval in jeopardy.

The reason for this new rule? I suspect that it was the discovery by Fannie Mae that many homeowners who defaulted on their loan in the last 24 months had went out and gotten additional debt after their credit report was first pulled by the lender. There was a direct pattern and trail of results that showed a correlation between homeowners incurring additional debt between application and closing and defaulting on a mortgage loan.

Moral of the story?

If you are in the process of getting a home loan, be sure not to take out any additional debts during the process. Wait until after you close your mortgage and move into your new home.

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