Fannie Mae has set new underwriting rules making it more difficult for many homebuyers to obtain purchase-assist loans when relocating for job-related reasons. Fannie Mae will no longer consider income from “trailing spouses” in loan applications. Buyers relocating for career reasons, accompanied by their newly unemployed spouses, were formerly permitted to count the former income of the spouse towards the qualifying household income. The difficulty of finding a new job in the current market, however, has led Fannie Mae to tighten its standards; a move that will make career based moves less likely for many. For now, only documented current income in the new location will count towards Fannie Mae loans. Freddie Mac continues to count income from trailing spouses in the income-to-debt ratio when qualifying for a purchase assist loan.

first tuesday take: Back to basic fundamentals without any ruffles around the edges. This is becoming known as the “vanilla” mortgage. Regulations for mortgage maintenance, which were first dropped in 1986 when second trust deeds on homes were permitted, and later when most all mortgage parameters were eliminated in the first half of the 2000s, are returning. Please get used to it, since it is good for the forward long-term stability of the real estate resale market of the MLS.

Incidentally, the regulated vanilla mortgage will force tenants to remain tenants until their job stability is sufficient to allow them to settle down into long-term homeownership within a community. Fannie Mae’s policy will not interfere with relocation for job enhancement – unless owners can not sell their current homes for reason of the policy disqualifying the buyer who was relocating into the home they are selling.

Re: “Fannie Mae adds tougher underwriting”, from the San Francisco Gate