Student loans and fannie mae

 

student loans and fannie mae

UPDATED: 7/16/2016 – Student loans and mortgage qualifying are indeed a hot topic. Since first posting this article in March 2016 both FHA and Fannie Mae have made significant changes to their treatment of Income Based Repayment student loans.

Some of the changes will help those with IBR student loans while others most certainly will not. Updates are highlighted in RED.

If you have questions about your specific situation and potential options, comment in the thread at the end of the article and I’ll do my best to get you the answers you need.

Student loans and fannie mae

Current and delinquent student loans appear on borrowers’ credit reports. How long a delinquent student loan will appear on a credit report depends on whether the loan is private or federal. Federal law controls how long a derogatory , the term used to describe a negative mark, can appear on a credit report. Let us start by reviewing the rules for credit reports.

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies (CRAs). The specific law is called the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer’s credit report for up to 7½ years. To determine when an account will be removed by the CRAs (TransUnion, Equifax, and Experian and others), add 7 years to the date of first delinquency. The date of first delinquency is shown in credit reports. Subsequent activity, such as resolving the debt or one debt collector selling the debt to another collector, is irrelevant to the 7-year rule.

The FCRA 7-year rule is separate from state statutes of limitations for debt issues. Learn the lifespan of a judgment in your state at the Bills.com Statute of Limitations Laws by State page.

UPDATED: 7/16/2016 – Student loans and mortgage qualifying are indeed a hot topic. Since first posting this article in March 2016 both FHA and Fannie Mae have made significant changes to their treatment of Income Based Repayment student loans.

Some of the changes will help those with IBR student loans while others most certainly will not. Updates are highlighted in RED.

If you have questions about your specific situation and potential options, comment in the thread at the end of the article and I’ll do my best to get you the answers you need.

A recent study found that a recent college graduate with student loan debts who is a first time home buyer and want to purchase their first home would have to make over 35% more a year, or $9,000 more, than a home buyer who just graduated from college with no student loan debt. This study was conducted by RealtyTrac.

HUD’s 2016 FHA Guidelines On Student Loans is stated in the Mortgage Letter (ML) 16-08 for FHA Case Number which are assigned on or after June 30, 2016.

The Mortgagee will need to state and include the borrowers monthly student loan payments which is shown on the borrower’s credit report, the borrowers student loan agreement, or the student loan borrower’s payment schedule statement and the mortgage underwriter will need to include the monthly student loan debt payments in the calculations of the borrowers debt to income ratios.