FNMA will not require preclosing credit report

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Fannie Mae has decided to not make it mandatory to require a last minute credit report prior to closing escrow to be pulled on each applicant. However don’t be surprised that many lenders may issue their own overlay in which they may still practice this activity. This policy can derail a California real estate loan if applicants aren’t properly advised.
The preclosing credit report typically is pulled to make sure the applicant(s) have not applied for any new credit or additional credit extensions between the time they intially applied for the home loan and shortly before they close escrow. It was looked at as a policy to prevent borrower fraud.
It’s best to make it a policy to advise all applicants to not make any changes to their credit profile whatsoever during the loan process. Acquiring for any new credit whether payments are delayed on the new purchase or not, applying to have your credit limit raised can cause your credit scores to drastically drop which will cause your loan to be denied if the lender finds out what you are doing.
Lenders typically put in house or third party fraud detection systems in place to track all applicants credit activity during the loan process. California real estate loan applicants need to know Big Brother is alive and well.
I would just prepare all applicants as if there is a preclosing credit report policy in place, that way you’ll be on the safe side.

Best
KW

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