Fannie Mae's new "Loan Quality Initiative" went into effect on June 1, 2010...which means that loans may be at risk for some buyers. Here's what you need to know - and what you need to do - to keep your deals from blowing up right before closing.

Undisclosed debt is a leading cause of mortgage fraud and early payment loan defaults. That's why, as of June 1, lenders who originate mortgages that will be sold to Fannie Mae are being advised to pull a second credit report on many transactions just before the loan closes. By reviewing a second credit report, lenders can find out whether other creditors have recently requested information about the mortgage applicant. This can uncover situations in which an applicant might be trying to obtain several loans (from multiple, unwitting lenders) on the same property. It can also reveal less insidious, but still relevant conditions, such as a change in the applicant's debt-to-income levels.

If the second credit report includes any negative changes, the result could be a higher interest rate and/or fees, or even worse, the loan could be denied altogether!

Don't let this happen to you.

Please don't hesitate to contact me if I can answer any questions at all for you about this important news from Fannie Mae.