New York Times
http://www.nytimes.com/2008/08/24/realestate/24mort.html?_r=1&ref=business&oref=slogin
This month, Fannie and Freddie increased the fees they charge lenders for many loans, effectively bumping up interest rates for many borrowers who have marginal credit. The companies also tightened their policies on refinance loans that enable an owner to take cash out of a home.
Those buying homes will have little choice but to absorb the cost. But the new policies will be felt more by those thinking of refinancing mortgages. Such loans have grown less attractive in recent months, as 30-year fixed-rate mortgage rates pushed beyond the 6.5 percent range. (As of Thursday, the average rate was 6.54 percent in the Northeast, according to Freddie Mac.)
Many owners with long-term mortgages refinanced their loans when interest rates were below 6 percent in recent years. Now that rates are inching higher, the only reasons that one might refinance a loan at a higher rate, lenders and brokers said, would be to extract cash or to shift from an adjustable-rate loan to a fixed-rate one. But Fannie and Freddie?s recent policy changes in FICO credit score standards have reduced the number of people who qualify for such transactions.
Even those with excellent credit score will not be able to take cash out of their homes if, after the loan, they have less than 15 percent equity in the homes. Previously, the threshold was 10 percent, and people with low credit scores could not get such deals.
Original source: http://creditscorenewsaggregator.wordpress.com/?p=9
