Mortgage Blog

Fannie Mae has set new standards for ARM products starting Aug 1st.

1)The new standards require ARMs with initial interest rate periods
of five years or less to be qualified at the greater of the note rate
plus 2% or the fully indexed rate (index plus margin).

2)For interest-only loans, LTV<=70% and  credit score must be 720 or
higher and with 24 months of reserve.

3)Balloon loans, which generally are characterized by lower initial
interest rates and a significant balance due at maturity, will no
longer be eligible unless they receive special approval.

4)All loans not meeting the new guidelines have to be purchased as
whole loans on or before Aug. 31 or delivered into mortgage-backed
securities pools with issue dates on or before Aug. 1.