As you know one of the key pieces of advice to give a homebuyer under contract or just looking for a home is to not go out and purchase anything new and to not utilize their credit until their home purchase has closed. In fact, in addition to verbally covering this with all of my clients I also send out a Helpful Hints document that reiterates this warning (among others) just to ensure we lay a strong foundation for a smooth closing.

For those eager buyers that have slipped up and purchased a new car or TV too soon their saving grace has always been that we don’t have to pull a new credit report unless the one we have on file is over 90 days old. This loophole has allowed many people’s new debts to fly under the radar as there is no reason to “re-pull” credit and reveal the new payment (s). That policy is changing as we speak.

In a new “Quality Initiative” affecting all new loan apps on or after June 1st, Fannie Mae announced that it will be requiring validation of “No New Liabilities.”

Remember that Freddie/FHA/VA etc… all tend to follow Fannie Mae policy. For now this just means that borrowers sign a document stating they have acquired no new debt since we pulled credit (see attached). However, the credit companies are currently developing a soft pull method that will allow a new report to be run that will NOT count as an inquiry but that will update and reveal any and all debts up to the date of closing.