New rules set by Freddie Mac April 15, 2007Posted by Jay Medina in News and Information.
Beginning in September, Freddie Mac will change its policies regarding the purchase of subprime adjustable-rate mortgages. From that point, loans with little down and very small payments up-front will undergo much tougher guidelines. It will not buy subprime loans unless the borrower is qualified to pay for the loan at its fully-indexed and fully-amortized rate, not merely a short-term, low-ball rate.
Also, there will be stronger required proof of financial capacity. For most borrowers this will mean showing tax returns and W-2 forms, and they will require lenders to collect money each month to assure that property taxes and insurance are being paid.