The following is from the The Mortgage Report Blog.

In a move that will stymie thousands of would-be home buyers and homeowners, Fannie Mae announced another round of mortgage guidelines changes last week.

Unlike past revisions in which Fannie Mae tightened debt ratio and credit scoring requirements, however, the newest underwriting updates zero in home equity and home buyer downpayments.

This is consistent with the emerging underwriting philosophy that Collateral is King.

Paraphrasing Jeff Spicoli:

No home equity, no downpayment, no dice

Effective December 13, 2008, Fannie Mae will enforce the following single-family residence restrictions:

  • Primary residence, “cash out” refinances are limited to 85% loan-to-value
  • Second home, cash out refinances are limited to 75% loan-to-value
  • Investment properties cannot be refinanced without a 25% equity position

Each bullet point represents a 5 percent tightening over the previous guidelines.

As Boston real estate blog readers do you like the new requirements? Will this be another shoe dropping on the local real estate market? Do you even care?

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