It is just not getting any easier for home buyers hoping to finance their deals with mortgage backed loans.
Beginning June 1, lenders originating mortgages being sold to Fannie Mae will have to pull a second credit report just before the loan closes. According to the National Mortgage News, the new quality control requirement is designed to prevent a type of mortgage fraud called "shotgunning," a mortgage scam in which someone obtains several loans (from multiple, unwitting lenders) on the same property. all at the same time. Typically, a shotgun fraudster skips town with the proceeds of all his loans. Most of the lenders do not recoup a cent because their mortgages are subordinate to the first one recorded and the home will not fetch enough in a sale to cover the junior liens.
The second credit reports, it is thought, will alert lenders to other creditors who have recently requested information about the mortgage applicant.
Buyers are cautioned (as always) to defer major purchases like cars or boats in the months leading up to a home closing or to otherwise request new lines of credit in order to avoid last minute hassles as lenders may insist on delaying closings while they investigate last-minute credit inquiries.