Fannie Mae Further Tightens Lending Rules

Fannie Mae announced that they will now require a minimum FICO score for loans it buys on an individual basis. The new minimum FICO score will be 580. Up until now, Fannie Mae never set a minimum credit score.

They also announced that they will increase the time required after a foreclosure before a borrower is eligible to obtain a Fannie Mae mortgage from the current 4 year period to 5 years. But, Fannie Mae said that they will allow shorter periods for borrowers who can document extenuating circumstances that have forced the foreclosure.

These changes are just the latest in a long line of changes from Fannie Mae and Freddie Mac in response to the housing downturn and mortgage crisis. These changes come on the heals of two rounds of increasing loan-level pricing adjustments announced by Fannie Mae and Freddie Mac over the past several month (See see "How much will my credit score cost me on my next mortgage?" and "Credit Score Affects Interest Rates Even More").

This again shows how much more important credit scores are becoming and how vigilant all people must be about what is on their credit reports (See “Check your credit report every year – FREE!”).

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