Fannie Mae’s automated system that is underwriting Desktop Underwriter (DU), evaluates home loan delinquency danger and gets to an underwriting recommendation by depending on a thorough study of the main and contributory risk facets in a home loan application. (See B3-2-03, Risk Factors Evaluated by DU) It analyzes the data into the loan casefile to attain a credit that is overall evaluation to ascertain eligibility for distribution to Fannie Mae.
Nobody factor determines a borrower’s prosperloans willingness or ability to help make his / her home loan repayments. DU identifies low-risk facets that may offset high-risk facets. When several factors that are high-risk contained in that loan casefile without enough offsets, the chances of severe delinquency increases.
DU conducts its analysis uniformly, and without reference to race, gender, or any other factors that are prohibited. DU utilizes validated, statistically significant factors which have been proved to be predictive of home loan delinquency across all groups.
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. Lenders bear single duty for complying with relevant legal guidelines, and these compliance responsibilities may possibly not be imposed upon or shared by Fannie Mae.
Underwriting with DU
But, the submission that is first DU for underwriting purposes must happen before closing of this home loan.
As soon as the home mortgage or debtor information modifications and it also no more matches the knowledge utilized once the loan casefile had been underwritten that is last DU, the financial institution must upgrade the information and resubmit the mortgage casefile to DU. Exceptions are specified in B3-2-10, Accuracy of DU information, DU Tolerances, and Errors into the credit file.
If the loan casefile is resubmitted to DU after shutting and just before distribution to Fannie Mae, the financial institution accounts for ensuring that:
All information supplied when you look at the last distribution to DU fits 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 last distribution.
The lending company may request a brand new credit history after shutting once the loan casefile is resubmitted and, as with every loan casefiles, must adhere to the Fair credit rating Act pertaining to the point and nature associated with the inquiry. In the event that brand new credit history contains information that is unique of the info utilized to get ready the last application for the loan which was finalized by the debtor at closing, the mortgage application should be updated. (Borrower signature(s) are not essential as a result of the improvement occurring post-closing. ) The lending company must add both the signed that is final the updated unsigned loan requests into the loan file.
Note: The credit history must meet up with the allowable chronilogical age of papers as of the note date. In the event that credit history expired ahead of the note date together with loan casefile will be resubmitted to DU, a brand new credit file should be required.
The lender may not be able to access the original DU loan casefile for resubmission purposes in certain instances. Loan providers may develop 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 above mentioned loan provider responsibilities are met, such as the updating associated with the last application for the loan, if relevant;
The mortgage hasn’t yet been brought to Fannie Mae;
The mortgage gets the exact same information (for instance, the exact same borrower(s) and home) as had formerly been underwritten through DU just before shutting utilizing another loan casefile, and that loan casefile received an qualified recommendation from DU;
The lending company keeps the DU Underwriting Findings Report through the original loan casefile ID into the loan file;
The DU submission making use of the brand new loan casefile happens a maximum of 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 new credit history is required, the lending company complies with all the Fair credit scoring Act.
The mortgage loan may not be delivered to Fannie Mae if the resubmission to DU results in an “ineligible” recommendation.
Note: If the high quality control function is carried out before distribution, the above demands apply. If quality control is carried out 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 general underwriting recommendation and lists the steps essential for the lending company to accomplish the processing of this loan file. This might be usually the first report seen by an 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 review report contains a lot of the information that is same on the Uniform Underwriting and Transmittal Overview (type 1008).
Every time that loan casefile is resubmitted to DU, the info 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 loan that is unique ID.
Loan Casefile Archival Policy
DU loan casefiles are archived with no longer retained in DU 28 months through the date the loan casefile had been last updated. This time around framework is supposed to ensure the sum total number of loans within the system has reached a level that is manageable decreasing the full time required by DU to look for and recover loan casefiles
After that loan casefile is archived from DU, it can’t be restored. If that loan casefile that is archived needs to be re-underwritten, a loan that is new should be produced and submitted to DU. The mortgage casefile will undoubtedly be at the mercy of the policies in place for the present type of DU. Fannie Mae just isn’t in charge of keeping loan casefiles for the financial institution.
Loan Application Sections
Those items given just below describe displays associated with online application for the loan in the DU interface and match sections within the Uniform Residential application for the loan (Form 1003):
Area we, form of Mortgage and Terms of Loan
Part II, Topic Property Address and Reason For Loan
Area III, Borrower Information
Area IV, Employment Information
Area V, Monthly Money and Combined Housing Cost
Area VI A, Assets
Area VI R, Real-estate Owned
Part 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 tips returned by DU:
General Lender Needs
Whenever underwriting loans with DU, the loan provider must:
Employ prudent underwriting judgment in evaluating whether that loan casefile should really be authorized and brought to Fannie Mae;
Verify the precision associated with the information it submits, making certain it would not fail to submit any information that may have affected the DU recommendation had it been known;
Make certain that the mortgage complies with all the verification communications and approval conditions specified within the DU Underwriting Findings report;
Apply due diligence when reviewing the documents within the loan file;
Review the credit history to verify that the data that DU examined according to the borrower’s credit score ended up being accurate and complete;
Determine if there clearly was any possibly derogatory or contradictory information that is maybe maybe perhaps not area of the information analyzed by DU; and
Do something whenever erroneous information in the credit file or contradictory or derogatory information within the loan file would justify investigation that is additional would offer grounds for a choice that is distinct from the recommendation that DU delivered.
As an example, if a foreclosure ended up being reported within the credit history but wasn’t detected by DU (that is, it absolutely was perhaps maybe not referenced in every verification messages), the financial institution must figure out if the mortgage complies aided by the relevant guidelines (see B3-5.3-07, immense Derogatory Credit Events — Waiting Periods and Re-establishing Credit).
The dining table below provides sources to your notices and Release Notes which have been given which are linked to this subject.