Fannie Mae’s automated system that is underwriting Desktop Underwriter (DU), evaluates home loan delinquency danger and gets to an underwriting recommendation by counting on an extensive study of the main and contributory danger facets in home financing application. (See B3-2-03, Risk Factors Evaluated by DU) It analyzes the info in the loan casefile to attain a credit that is overall evaluation to ascertain eligibility for distribution to Fannie Mae.
No body factor determines a borrower’s willingness or ability to produce his / her mortgage repayments. DU identifies low-risk facets that will offset factors that are high-risk. Whenever a few factors that are high-risk contained in a loan casefile without enough offsets, the probability of severe delinquency increases.
DU conducts its analysis uniformly, and without respect to race, gender, or other prohibited facets. DU utilizes validated, statistically significant variables that have been been shown to be predictive of home loan delinquency across all teams.
DU will not assess a loan’s conformity with federal and state regulations including, without limitation, a loan’s prospective status as a qualified home loan under relevant legal guidelines. Loan providers bear single obligation for complying with relevant regulations, and these conformity responsibilities might not be imposed upon or provided by Fannie Mae.
Underwriting with DU
Nonetheless, the very first distribution to DU for underwriting purposes must happen before closing of this home mortgage.
As soon as the home loan or debtor information modifications and it no further matches the data utilized as soon as the loan casefile had been last underwritten with DU, the financial institution must update the info and resubmit the mortgage casefile to DU. Exceptions are specified in B3-2-10, Accuracy of DU information, DU Tolerances, and Errors when you look at the credit file.
As soon as the loan casefile is resubmitted to DU after shutting and just before distribution to Fannie Mae, the financial institution is in charge of making sure:
All information supplied into the last distribution to DU matches the regards to the shut loan;
The mortgage distribution data matches both the loan that is closed the ultimate information submitted to DU; and
The mortgage casefile gets an qualified recommendation from DU regarding the submission that is final.
The lending company may request a brand new credit history after shutting as soon as the loan casefile is resubmitted and, as with every loan casefiles, must conform to the Fair credit rating Act pertaining to the reason and nature associated with the inquiry. In the event that brand new credit file contains information that is distinct from the knowledge utilized to get ready the ultimate application for the loan that has been finalized by the debtor at closing, the mortgage application must be updated. (Borrower signature(s) are not essential as a result of enhance occurring post-closing. ) The lending company must consist of both the last signed and the updated unsigned loan requests into the loan file.
Note: The credit history must meet up with the age that is allowable of as of the note date. In the event that credit file expired prior to the note date as well as the loan casefile has been resubmitted to DU, a credit that is new needs to be requested.
The lender may not be able to access the original DU loan casefile for resubmission purposes in certain instances. Loan providers may produce a loan that is new in DU after shutting to ensure all information within the last DU submission fits the regards to the shut loan, offered every one of the following conditions are met:
The aforementioned loan provider responsibilities are met, like the updating associated with the last application for the loan, if relevant;
The mortgage have not yet been sent to Fannie Mae;
The mortgage gets the exact same information (for instance, exactly the same borrower(s) and home) as had formerly been underwritten through DU just before shutting making use of another loan casefile, and therefore loan casefile received a qualified recommendation from DU;
The lending company keeps the DU Underwriting Findings Report through the loan that is original ID into the loan file;
The DU submission with the brand new loan casefile happens only 60 times after shutting (in line with the note date) or year after initial closing for single-closing construction-to-permanent loans (described in B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Deals); and
As previously mentioned above, when a brand new credit file is required, the lending company complies using the Fair credit scoring Act.
In the event that resubmission to DU results within an “ineligible” recommendation, the home loan is almost certainly not brought to Fannie Mae.
Note: If the high quality control function is conducted before distribution, the requirements that are above. If quality control is conducted after distribution, refer to D1-3-03, Lender Post-Closing Quality Control post on information Integrity.
DU Underwriting Reports
DU dilemmas 2 kinds of reports:
The DU Underwriting Findings report summarizes the entire recommendation that is underwriting lists the steps required for the lending company to perform the processing associated with the loan file. This will be usually the report that is first by the underwriter or that loan officer following the loan casefile happens to be underwritten with DU. This report is described in B3-2-11, DU Underwriting Findings Report.
The Underwriting research report contains much of the information that is same on the Uniform Underwriting and Transmittal Overview (Form 1008).
Every time a loan casefile is resubmitted to DU, the data within these reports is updated with information through the many present distribution. The time and date of every distribution are recorded for each report, combined with the unique loan casefile ID.
Loan Casefile Archival Policy
DU loan casefiles are archived with no longer retained in DU 28 months through the date the mortgage casefile ended up being last updated. This time around frame is supposed to ensure the full total number of loans within the system has reached a workable degree, decreasing the time required by DU to look for and recover loan casefiles
After that loan casefile is archived from DU, it is not restored. If financing casefile which has been archived should be re-underwritten, a brand new loan casefile should be developed and submitted to DU. The mortgage casefile may be at the mercy of the policies in place for the version that is current of. Fannie Mae just isn’t responsible for keeping loan casefiles for the financial institution.
Loan Application Sections
The things given below describe displays for the loan that is online in the DU interface and match parts within the Uniform Residential application for the loan (type 1003):
Part we, form of Mortgage and Terms of Loan
Area II, Subject Property Address and Reason For Loan
Part III, Borrower Information
Part IV, Employment Information
Part V, Monthly Income and Combined Housing Cost
Part VI A, Assets
Area VI R, Property Owned
Area VI L, Liabilities
Part VII, Details of Transaction
Part VIII, Declarations
For guidance in information entry with DU, see the DU Job Aids available on Fannie Mae’s web site.
DU Underwriting Guidelines
The after topics describe the underwriting guidelines returned by DU:
General Lender Needs
Whenever loans that are underwriting DU, the loan provider must:
Employ prudent judgment that is underwriting evaluating whether that loan casefile must be authorized and sent to Fannie Mae;
Verify the accuracy associated with information it submits, making certain so it did not neglect to submit any information which may have affected the DU recommendation had it been understood;
Make sure that the mortgage complies with all the verification communications and approval conditions specified into the DU Underwriting Findings report;
Apply diligence that is due reviewing the paperwork when you look at the loan file;
Review the credit file to verify that the data that DU examined with regards to the borrower’s credit score ended up being accurate and complete;
See whether there was any possibly derogatory or contradictory information that is maybe perhaps not an element of the information analyzed by DU; and
Take action whenever erroneous information when you look at the credit file or contradictory or derogatory information when you look at the loan file would justify additional investigation or would offer grounds for a determination this is certainly different from the recommendation that DU delivered.
For instance, if a property foreclosure had been reported when you look at the credit file but wasn’t detected by DU (that is, it had been maybe not referenced in almost any verification communications), the financial institution must see whether the loan complies because of the online payday loan direct lenders relevant guidelines (see B3-5.3-07, immense Derogatory Credit Events — Waiting Periods and Re-establishing Credit).
Relevant Notices
The dining dining table below provides sources towards the notices and Release Notes which have been released which are linked to this subject.