Fannie’s New DTI to Result in Increased Mortgage Approvals
July 28, 2017
Fannie Mae’s announcement in May that it will raise the debt-to-income cap from 45 to 50 percent is a win for expanding access to credit, especially for minority families, says a recent report by the Urban Institute.UI anticipates that as many as 95,000 new mortgages could be approved annually. With African-American and Latino families more likely to have DTI ratios above 45 percent, the authors of the paper note that a large share of the new loans will likely be to those families. Prior to the change, Fannie allowed for flexibility up to 50 percent DTI in certain cases.
The creation of a U.S. sovereign wealth fund could grease the skids for an end to the conservatorships of Fannie Mae and Freddie Mac.
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