In June 2010 Fannie Mae rolled out a new criteria for loan applications called the Loan Quality Initiative. For loan applications taken after that date and for conventional loans only, lenders must do a “soft” repull of credit. What this does is update a borrower’s credit report with new history and inquiries, but doesn’t update the scores. If a borrower has been late on a payment or obtained new credit between the initial credit report and the subsequent soft pull, then that borrower’s loan will need to be re-underwritten. The borrower may no longer be qualified if there is a late payment or if their debt to income ratio is exceeded by the new debt. Since a soft pull does not pull credit scores, it does not register as a credit inquiry nor does it have any affect on a credit score. The goal is to ensure that a borrower does not accumulate more debt than what can actually be afforded. This is another measure being taken to hopefully prevent foreclosures in the future and to help stabilize the economy.

About the Author: Jolynn Craig

Leave A Comment