For those of us who have been hoping for the credit markets to show signs of stabilization we can keep on waiting.
Freddie Mac announced last week that they would no longer issue or accept underwriting approvals knows as “accept plus” approvals. These approvals, which were mostly earned by borrowers with high credit scores and large down payments, featured little to no income documentation requirements. In essence, these were almost like “stated income” loans because the borrower would not have to provide any income documents to confirm the income they listed on their application.
For example, we would expect that an applicant buying a primary residence with a credit score> 740 and >30% down would likely receive an “accept plus” approval.
Freddie Mac’s move to eliminate “accept plus” approvals is another sign that lenders are acting with extreme caution. Unfortunately this move will also negatively impact many more applicants ability to buy. However, I would expect that this will also create a niche for a private institution to