Apparently, Freddie Mac has issued changes on July 13, 2007 as directed by their regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), to their requirements for the purchase of nontraditional mortgage products.
For the purpose of discussion, nontraditional Mortgages are Initial InterestSM Mortgages and other adjustable-rate Mortgages (ARMs) and fixed rate Mortgages that have an interest-only feature, as well as ARMs with the potential for negative amortization (such as the various payment option ARMs) that are purchased by them on a negotiated basis.
The changes are effective for these nontraditional mortgages with loan application dates on or after September 13, 2007 (Freddie Mac). What does this mean? It will be harder to qualify on one of these loans due to having to use a full P&I payment. Update as of 7/18/07...Per a direct call I made to FNMA customer service, they will be putting out a notice on July 22, 2007 that is effective the same day, that is expected to be addressing the same issue in basically the same way as Freddie Mac.
So, if you are considering one of these various programs, get your application in now or you'll loose a large part of the advantage in qualifying overnight with Freddie Mac and apparently FNMA. They do tend to keep in lock-step.
I thought you would like to know...
Bill Wilbanks / www.OrlandoMortgageMasters.com
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