FILE: A sign sits in front of a new home for sale in West Des Moines, Iowa. (AP)
Some of the largest U.S. mortgage lenders are preparing to further ease standards for borrowers after the release of new guidelines this month from mortgage giants Fannie Mae and Freddie Mac .
The new guidelines, to take full effect Dec. 1, resulted from an agreement in October meant to clarify when lenders would be penalized for making mistakes on mortgages they sell to Fannie and Freddie. Lenders have blamed the lack of clarity for tight credit conditions that have made it difficult for many consumers to qualify for a mortgage.
Relaxing the lending standards potentially could make it possible for hundreds of thousands of additional consumers to get mortgages.
Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute, said the moves are “going to be big,” but she added that “it’s going to take time” to see the full impact of the changes.
The Urban Institute, a Washington think tank, earlier this year estimated that as many as 1.2 million additional home loans would be made annually if mortgage availability were at “normal” levels.
Some lenders, including Wells Fargo Co. and SunTrust Banks Inc., said borrowers should begin to see initial changes in a few weeks, including faster turnaround times for mortgage applications to be processed.
Currently, it can take two months or longer between the time a consumer makes an application and the loan is made.