December 1, 2014 12:38 PM
New guidelines go into effect today aimed at making mortgage lending easier. The new standards stem from an agreement in October put in place to clarify when banks would be penalized for making mistakes on mortgages they sell to Fannie Mae and Freddie Mac.
Yahoo Finance Senior Columnist Michael Santoli says because the banks themselves are risk averse after the mortgage meltdown, they are very conscious of exactly what they are allowed to do and how they are supposed to treat loans. “They apparently had very unclear guidance from Freddie and Fannie about the rules of the road,” he says, “in terms of which types of mortgages were going to be acceptable for Fannie and Freddie to buy.” Lenders have said this lack of clarity is why credit is tight and many consumers aren’t qualifying for loans.
The Urban Institute says 1.2 million additional home loans could be made per year as a result, according to the Wall Street Journal. Borrowers may see changes in the lending process within weeks. That may include a quicker turnaround time for mortgage applications. The Wall Street Journal says now it can take two months or longer from the time a consumer files an application for a loan to when the loan is actually made.