Fannie Mae says no to credit scores below 580

Source : Business Weekly

"Fannie Mae is setting new rules about what mortgages it will buy, including, for the first time, a credit score threshold.

The District of Columbia-based mortgage giant has told lenders it will no longer buy most loans made to borrowers with credit scores below 580, nor will it buy loans that have been more than 60 days past due within the past year.

Without evidence that extenuating circumstances led to a foreclosure, it also will no longer buy mortgages made to borrowers who have lost a home to foreclosure within the past five years. Fannie Mae currently considers mortgages after four years have passed.

The new rules go into effect June 1."

I can never understand the concept of "new rules" go into effect... A year back someone from Fannie (if I'm not mistaken) said .. we'll not be doing any more NINJA loans (No Income-No Job-No Assets) loans from August. To which it's a question of why were you doing it all along? Did it make any sense in the first place besides trying to make some money in between. With an almost implicit tax payer backing shouldn't Fannie and Freddie be indulging in more prudent lending ir-regardless of whether it is the "in-thing". Subprime was the "in-thing" a few years back - now everyone dreads the word and all we hear from Fannie is we're going to tighten a few months from now.