This weekend, Fannie Mae is overhauling its mortgage approval system.  Earning an "Approve/Eligible" is going to be decidedly tougher than in the past.

For home buyers that have been in the market since January, this is not news; Fannie has been steadily trimming its serviceable market.  Its changes were like duct tape on a leaky vessel.

Starting Monday, it's a brand-new bag and approvals may be sparse.

The good news for borrowers is that Fannie Mae is warning us of the change and will honor all approvals on the "old" system for 120 days. 

Therefore, if you know you'll need a new conforming mortgage within the next 4 months and don't already have a Fannie Mae pre-approval, type this BASIC program into your Commodore 64 and watch the output:

10    Give a complete mortgage application to your mortgage lender
20    Goto 10

Here's a quick look at the new guidelines and what's changing:

1. Higher levels of verifiable income now required
2. Condos are now considered very high risk versus a single-family residence
3. Paying private mortgage no longer makes borrowers less risky to banks
4. Piggybacking on somebody else's credit as an "authorized user" no longer allowed
5. 580 minimum credit scores for all home loans
6. Lengthened "cooling off" period from previous foreclosures and/or bankruptcies
7. 60-day mortgage lates are now considered very high risk
8. Cash-out remortgages are now considered much more risky than rate-and-term ones
9. Interest only home loans are now considered very high risk

If it seems like a long list, that's because it is.  Home buyers hit by the changes may be subject to higher mortgage rates, higher loan fees, or an outright denial on their application.

Mortgage guidelines continue to tighten and many more homeowners are finding themselves outside the circle.  At least this time, Fannie Mae is telegraphing the change.

Stay ahead of the game and get your mortgage approval into the system before the close of business Friday, May 30.  The mortgage approval you save may be your own.

I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey is now available.

As a reminder:

1. The survey is for conforming loans only.
2. You're welcome to email me about your pending plans to purchase or refinance.
3. I twitter market updates a few times daily.  Follow me, if you want.

Anyway, on to the group's predictions for the next 30 days:

• 69% of participants predict rates will increase
• 25% of participants predict rates will decrease
• 6% of participants predict rates will remain unchanged

I am predicting that rates will increase over the next 30 days, but that doesn't mean you should necessarily follow my advice when choosing whether to lock a rate, or float it.  My advice may not be appropriate for your individual situation.

From the Bankrate.com survey:

"Until oil prices fall, speculators will draw money from mortgage bonds. This should pressure mortgage rates higher."

It's been ugly this week.  Markets unwound six weeks of rate improvements in 72 hours.  Today, it's unwinding further.

I've been using Twitter as a way to communicate the market shifts to clients.  My tweets tell them when rates are likely to change so they can be more pro-active about their finances. 

Twitter's simple to set up and it's non-intrusive.  You're welcome to follow me if you'd like the updates, too.

Crude oil crossed $130 per barrel last week, taking gas prices along for ride.  Over the last 90 days, unleaded gas is up 25 percent and appears to be heading higher.

Americans are battered by higher pump prices but are still living their lives.  Unfortunately, the mainstream media throws salt on the gas price wound as often as possible.

In fact, with respect to gas prices, there's a lot of crazy talk in the media right now -- about how Americans are going broke; about how the global economy is off its rails; about the need for government intervention to protect the people.

And, it's very easy for laypersons to feel panic about the situation because media personalities can be very convincing. 

Thankfully, there's Google to provide some perspective.

Since oil first crossed $30 in 2003, the media has spouted Gloom-and-Doom each time that oil crosses a milestone number.  Its calls for economic demise have yet to be correct -- even though oil has more than quadrupled in cost since 2003.

Let's look deeper at milestone oil prices and the corresponding newspaper headlines since 2003 to see this in action.

• 2003: Oil at $30 per barrel.  Recession is feared.
• 2004: Oil at $40 per barrel.  Fault the war.
• 2005: Oil at $60 per barrel.  More recession fears.
• 2006: Oil at $70 per barrel.  Household budget worries.
• 2007: Oil at $80 per barrel.  Housing is the big worry.
• 2007: Oil at $90 per barrel.  Recession is likely.
• 2008: Oil at $100 per barrel.  Economy heading to the "Danger Zone".
• 2008: Oil at $110 per barrel.  Blame the Fed and the weak dollar.
• 2008: Oil at $120 per barrel.  Inflation is likely.
• 2008: Oil at $130 per barrel.  Inflation is really likely.

I'm not saying that the media is wrong -- I'm only saying that we've heard about this "oil crisis" before and the scary headlines are old hat.

Gas prices reach new, all-time highs every day.  We've dealt with it before, and we'll deal with it now.  Americans are as indifferent to $4.00 gas as we were to $3.00 gas last year.  We'll complain, but we'll move on. 

And when it costs $5.00 per gallon later this year, we'll adapt then, too.

The U.S. economy won't crash from rising gas prices -- despite what the "experts" tell us. A more practical threat to the economy will come in the form of something unpredicted -- a black swan -- because shocks to the system don't get absorbed into the economy the way that slow drips do.

American consumers are resilient.  Just look through what we've persevered so far:

1. The housing decline
2. The credit crunch
3. Speed Racer

We'll get through high gas prices, too.

(Images courtesy: The Wall Street Journal, WEA South Wales Online)