2016 Fannie Mae Guidelines Changes
This Article On 2016 Fannie Mae Guidelines Changes Was Written By Ron Granado
Fannie Mae has recently made 2016 Fannie Mae Guidelines Changes, which should open up lending to people living in a home, but no currently on title or on the mortgage, to refinance. This rule was known as the continuity of obligation rule, which required seasoning on title for at least 6 months before you could refinance into the name of either a spouse or immediate family member living in the house.
This is good for a few reasons: 1st, a non-borrowing spouse can assume the mortgage so long as they have the credit and income to do so. If the current borrower is filing bankruptcy, or has a pending litigation, it would be in their best interest to modify vesting (speak to an attorney on this matter please!).
2016 Fannie Mae Guidelines Changes: Pending Divorce
If there is an impending divorce, and one party was going to remain in the house, rather than do a sale and pay transfer taxes, legal, and title costs, you can now refinance and remove the party leaving the house, hence following the agreed upon divorce decree to the remaining spouse. All too often, there is a divorce but no quit claim deed is done removing the ex, and a couple years later when they go to sell or refinance, the ex-spouse is still vested and has to sign papers. If they leave the country and cant be tracked down, you see the potential issue here.
One other option is if the kids live in the house and work, and they are going to take over ownership. Why do a sale if they already live there? Put them on title, and one day later refinance to take the parents off. Some mortgage lenders have mortgage lender overlays
such as wanting to see a utility bill in the kid’s name or a tax bill paid by them once. There may or may not be cash out restrictions, but to pay off an ex in a divorce is not considered a cash out, so this may not be an issue on those types of transactions.
However you look at this change, guidelines are opening up, so please consult a mortgage professional to see your options if this situation applies to you, there may be an option on the table. Remember credit and income re still needed, there are no free gifts of assumption on a mortgage unless willingness and ability have been verified
Account Executive | Plymouth Title Guaranty Corp
1301 W. 22nd Street | Ste 505 | Oak Brook, IL 60523
About The Author: Ron Granado
Ron Granado is a writer for Gustan Cho Associates Mortgage And Real Estate Information Center and a moderator at Lending Network USA . Ron Granado is an expert in all areas of real estate and mortgage lending and is currently an account executive with Plymouth Title Guaranty Corporation based in Oak Brook, Illinois. Mr. Granado’s expertise is sought after by many real estate professionals and consumers due to his many years of experience in both commercial and residential title work. Stay tuned for more informational blogs by Ron Granado.