Despite the new guidelines laid out in May regarding last minute credit checks before closing, Fannie Mae now says those full reports are not mandatory for banks to pull.
Though there are systems in place to check if there have been inquiries into your credit health, and ways to see if there have been new lines opened, a full, formal report does not need to be pulled.
Buyers still should not open lines of credit, because there are still checks & balances. The reason for these last minute verifications is due to, according to an article in the Washington Post and Equifax:
Home loan applicants failed to mention — or loan officers failed to detect — “up to $142 million in auto loan payments” during mortgage underwriting in first mortgage files reviewed by Equifax last year alone, according to the credit bureau. Those loan accounts had average balances of $361 per month — more than enough to disqualify many borrowers on maximum debt-to-income ratio standards required by Fannie Mae, Freddie Mac and major lenders.
These could disqualify the buyer from being able to qualify for their mortgage, which would leave them unable to get a loan to buy their house.
In May, Fannie Mae had announced that they were going to do last minute credit checks, but have now decided the full report is unecessary.
Fannie Mae homebuyers need to ensure that they are upfront and aware of all credit lines they have open — and not open new ones from the time of application until after they buy their new house!