Who determines underwriting guidelines for conforming loans?

Fannie Mae is responsible for determining underwriting guidelines for conforming loans. Conforming loans are those that meet specific criteria set by Fannie Mae and Freddie Mac, which include limits on the loan amounts and requirements for borrower creditworthiness. By establishing these guidelines, Fannie Mae helps to standardize the loan process and ensures that mortgage lenders can sell these loans in the secondary mortgage market.

It’s crucial to understand that while Freddie Mac also plays a role in defining guidelines for conforming loans, the specific question asks who determines the guidelines, which aligns more directly with Fannie Mae's primary function in this area. The Federal Housing Finance Agency (FHFA) oversees both Fannie Mae and Freddie Mac but does not set explicit underwriting guidelines for loans; rather, it regulates the activities of these two government-sponsored enterprises. HUD, on the other hand, is primarily involved in government-backed loans like FHA loans and does not set guidelines for conforming loans either.