Fannie Mae’s new deposit guidelines to speed mortgage lending process, experts say

Rule change considered a positive sign for an industry awash in paperwork

New York /
Nov.November 30, 2012 12:00 PM

Fannie Mae has amended its guidelines on how mortgage lenders verify large deposits to borrowers’ bank deposits, which analysts tell The Real Deal will speed up the process in clearing loans. The new rule now requires borrowers to provide documentation for the source of bank deposits larger than 25 percent of their total monthly income. Previously, lenders required borrowers to source deposits of any amount.

The change, announced by Fannie Mae on Nov. 13, is one of the few positives changes since the housing crisis, said Rolan Shnayder, director of new development lending at H.O.M.E. Mortgage Bank.

The change is small, noted Debra Schultz, senior vice president of mortgage lending at Guaranteed Rate, but she estimated the new rule would speed up mortgage loan processing by 10 percent. “[This] cuts down on the paperwork in some matter,” she said. “[Sourcing deposits was] aggravating to the client. I’ve never run into a client with a deposit that I couldn’t source.”

However, approval of a mortgage loan remains a long process. “[There’s] so many other issue that slow me down right now,” Schultz said. “Our market is still slow.”

What deposits should be sourced became an issue after the housing market deteriorated, Shnayder said. “As the climate became more regulatory, banks started asking for smaller and smaller proof of deposits,” he explained. “It was left up to the banks to define what a ‘large deposit’ was.”

At one point, Shnayder said he had to source a loan for as little as $600.

“[This is] one of the few things we’re seeing that’s positive,” Shnayder said. “[Fannie Mae] found one little thing they could change that could lessen the burden.”

Recently, Fannie Mae and Freddie Mac suspended evictions and foreclosures for 90 days in the wake of Hurricane Sandy, as previously reported.

Fannie Mae also reported a net income of $5.1 billion in the second quarter of 2012, which put the government-sponsored entity in the black for the second quarter in the row, according to previous reports.


Related Articles

arrow_forward_ios
Fannie, Freddie to buy mortgages up to nearly $1M
Fannie, Freddie to buy mortgages up to nearly $1M
Fannie, Freddie to buy mortgages up to nearly $1M
FHFA director Sandra Thompson (FHFA, iStock)
Treasury suspends investment property restrictions to boost housing supply
Treasury suspends investment property restrictions to boost housing supply
From left: JPMorganChase CEO Jamie Dimon, Goldman Sachs CEO David Solomon and Morgan Stanley CEO James Gorman (Getty)
Demand for private-label mortgages on the rise
Demand for private-label mortgages on the rise
Fannie Mae CEO Hugh Frater (Fannie Mae, iStock)
Fannie Mae to count rent payments toward mortgage approval process
Fannie Mae to count rent payments toward mortgage approval process
Shares of Rocket Cos and LoanDepot rose while shares Fannie Mae and Freddie Mac plunged after Supreme Court ruling (Unsplash)
For mortgage sector stocks, Fannie and Freddie ruling was positive
For mortgage sector stocks, Fannie and Freddie ruling was positive
Mark Calabria and Sandra Thompson (Getty, FHFA)
Biden ousts Fannie, Freddie overseer, leaving them in government’s hands
Biden ousts Fannie, Freddie overseer, leaving them in government’s hands
JPMorgan Chase CEO Jamie Dimon (Getty)
JPMorgan invests in private-label mortgage platform
JPMorgan invests in private-label mortgage platform
Borrowers can now get a 30-year fixed-rate jumbo mortgage for $2 million at 2.65%. (iStock)
Jumbo mortgage lenders invade Fannie and Freddie’s turf
Jumbo mortgage lenders invade Fannie and Freddie’s turf
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...