More Relaxed Mortgage Rules Expected in Weeks


The tighter mortgage standards which have been introduced since 2008 have had a great negative impact on the housing market and on the economy as well as on prospect home buyers. Now the Federal Housing Finance Agency along with six other government agencies will introduce less strict rules which are designed to enable more people to enter the housing market. The introduction of the rules is planned for the late spring or early summer of 2014.

Under the new rules, Fannie Mae and Freddie Mac will approve mortgage loans with debt-to-income ratio higher than 43% in cases when borrowers have other strengths to compensate for the higher ratio and adhere to the set loan limits. This means that prospect home buyers who are now considered to be too risky by lenders may be able to secure a home loan much more easily in the future. This is especially true for those who have financial stability.

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The Federal Housing Finance Agency has made a commitment to make mortgage loans more accessible to people with credit scores between 580 and 680. It has been estimated that around 13 million people in the United States fall into this category. The Agency has not proposed precise rules which will enable lenders to approve mortgage applicants with lower credit score. However, the whole set of new standards is expected to lead to a decline of the average credit score required for loans backed by Fannie Mae and Freddie Mac from its current level of 752.

New borrowers can expect much more flexibility with mortgage repayment as well. Under the new rules, they will be allowed to miss 2 payments throughout the first 3 years of the loan. This will not result in automatic repurchase demand from Fannie Mae and Freddie Mac.

The new mortgage rules will certainly make home loans and housing more accessible, but the size of their positive impact is yet to be estimated.



Mailynne serves as a content strategist and writer for She is ahighly task-oriented strategic planner and experienced writer. Over the past 10 years, Mailynne has managedcontent for both large corporations, non-profits and businesses. She specializes in managing digital marketing,branding and web development content. Mailynne has worked with a variety of local, national and international organizations.


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