In its recently issued June 8 guidelines, among other changes, Fannie Mae reversed a long-standing policy that permitted mortgage applicants to include the income of trailing spouses in the household income data supplied to qualify for a loan sold to that organization, before the spouse actually had procured new employment. Going forward, its underwriting guidelines may have deleterious implications for relocating families, since transferees applying for mortgages can no longer include the co-borrower’s income, unless employment in the new location is secured and documented. Freddie Mac has retained its guidelines, however, that do allow the inclusion of a trailing co-borrower’s income.
Worldwide ERC® is concerned about the impact of the guidelines on our industry and on the ability of companies to maintain a mobile U.S. workforce. “Eliminating the second income that lenders can consider when qualifying a relocating family for a mortgage makes the current challenging relocation environment even more so,” said Jan Hatfield-Goldman, Worldwide ERC® VP of Research and Education. “Some transferees will either have to qualify on the basis of one income if the trailing spouse/partner is unable to quickly secure a job in the new location and buy 'less house' than they wanted, or they may be required to rent for an extended period of time until the spouse or partner is re-employed. This could drag out the relocation process - which was already slowed by the economy – even further. If a couple must wait to purchase a new home until the spouse can find a new job, it could well cause some to reconsider whether a transfer is the right choice for them in the current economic environment.”
Worldwide ERC® members have noted other issues likely to be affected by the new guidelines that may include changes to policy that increase benefits and benefit limits, such as increased spouse employment assistance and/or temporary living to allow the spouse/partner to be re-employed at the new location; increases in storage and moving costs; impact on the quality of the transferring family’s lifestyle and a resulting dissatisfaction with the move; diminished move acceptance and added complexities in program administration.
Worldwide ERC® is monitoring this situation, and will keep its members informed of further developments as they may occur.
Click here for the June 8 Fannie May trailing spouse guidelines (see pg. 5)