Ripping straight from the pages of the “those who failed to learn from history are doomed… period” book of centrally-planned desperation to maintain American Dream ‘wealth’ by unsustainably levitating home prices, the government’s bankruptcy mortgage guarantors have just announced “HomeReady Mortgages.” These so-called ‘enhanced affordable lending products – provided by the US taxpayer – enable 97%-plus Loan-to-Value loans to borrowers based not on their income (which is too low) but on “non-borrowers” like extended family or children! “Whatever it takes” to maintain the illusion of normalcy and hand out more money just reached peak Einsteinian insanity.
In its latest ‘offering’ letter for HomeReady Mortgages, Fannie Mae offers what it calls ‘innovative underwriting flexibility’…
- Offers an innovative new feature that supports extended family households: will consider income from a non-borrower household member as a compensating factor in DU to allow for a debt-to-income (DTI) ratio >45% to 50%.
- Allows non-occupant borrowers, such as a parent.
- Permits rental income from an accessory dwelling unit (such as a basement apartment).
- Allows boarder income (updated guidelines provide documentation flexibility).
In other words, as KARE11 tries to defend…
“It could be a credit problem, it could be an income problem, it could be an employment history problem, it could be a debt-ratio problem. There are a number of things that can affect a person’s situation,” said Chris O’Connell, a licensed mortgage loan officer with Nations Reliable Lending in Edina.
Mortgage giant Fannie Mae recognizes these hardships, and in response will soon offer a new kind of mortgage with new rules designed to add flexibility for borrowers.
“They’ve recognized that households have changed and our guidelines need to change with it,” said O’Connell.
HomeReady will consider incomes from others planning to live in the house without being a borrower on the loan.
This means, if you live with parents, siblings, working children or maybe a roommate, as long as they make 30 percent of the household income, Fannie will include their money to help you qualify for a loan.
These are being called “non-borrowers” by Fannie.
Non-borrower backed mortgages!!??
Also, non-occupants of the home can add further income to the mortgage. Perhaps parents living elsewhere but willing to help pay the loan.
“The typical household has changed now. It’s not the household we used to know 20 years ago because there’s a lot of extended family. Parents are living with the family, children are staying home longer, and it allows you to consider their income too,” said Tousley.