Fannie Mae’s automated underwriting system, Desktop Underwriter (DU), evaluates home loan delinquency danger and gets to an underwriting recommendation by counting on a thorough study of the main and contributory danger facets in home financing application. (See B3-2-03, Risk Factors Evaluated by DU) It analyzes the knowledge when you look at the loan casefile to achieve a general credit danger evaluation to ascertain eligibility for distribution to Fannie Mae.
No body factor determines a borrower’s ability or willingness to help make his / her mortgage repayments. DU identifies low-risk facets that can offset high-risk facets. Whenever a few 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 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 applicable legal guidelines, and these conformity responsibilities may possibly not be imposed upon or provided by Fannie Mae.
Underwriting with DU
Nonetheless, the submission that is first DU for underwriting purposes must happen before closing of this real estate loan.
Whenever home loan or debtor information modifications plus it not any longer matches the info utilized once the loan casefile had been final underwritten with DU, the lending company must upgrade the info 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.
As soon as the loan casefile is resubmitted to DU after shutting and just before distribution to Fannie Mae, the lending company accounts for making sure:
All information supplied within the last distribution to DU fits the regards to the shut loan;
The mortgage distribution data matches both the shut loan and the ultimate data submitted to DU; and
The mortgage casefile gets an qualified recommendation from DU from the last distribution.
The financial institution may request a brand new credit file after closing once the loan casefile is resubmitted and, as with every loan casefiles, must adhere to the Fair credit scoring Act pertaining to the reason and nature of this inquiry. The loan application must be updated if the new credit report contains information that is different than the information used to prepare the final loan application that was signed by the borrower at closing. (Borrower signature(s) are not essential as a result of up-date occurring post-closing. ) The lending company must consist of both the signed that is final the updated unsigned loan requests within the loan file.
Note: The credit file must meet up with the allowable chronilogical age of papers at the time of the note date. In the event that credit history expired before the note date as well as the loan casefile has been resubmitted to DU, a credit that is new needs to be required.
The lender may not be able to access the original DU loan casefile for resubmission purposes in certain instances. Loan providers may produce a brand new loan casefile in DU after shutting to ensure all information into 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, like the updating of this 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, exactly the same borrower(s) and home) as had formerly been underwritten through DU ahead of shutting utilizing another loan casefile, and that loan casefile received an eligible recommendation from DU;
The financial institution retains the DU Underwriting Findings Report through the loan that is original ID into the loan file;
The DU submission utilizing the loan that is new happens a maximum of 60 times after shutting (in line with the note date) or one 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 mentioned above, each time a brand new credit file is required, the financial institution complies because of the Fair Credit Reporting Act.
The mortgage loan may not be delivered to Fannie Mae if the resubmission to DU results in an “ineligible” recommendation.
Note: If the product quality control function is conducted before distribution, the requirements that are above. If quality control is completed after distribution, refer to D1-3-03, Lender Post-Closing Quality Control summary of 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 essential for the lending company to perform the processing associated with loan file. That is often the report that is first by an underwriter or that loan officer following the loan casefile was underwritten with DU. This report is described in B3-2-11, DU Underwriting Findings Report.
The Underwriting research report contains a lot of the exact same information required on the Uniform Underwriting and Transmittal Overview (type 1008).
Every time that loan casefile is resubmitted to DU, the information and knowledge during these reports is updated with information from the many submission that is recent. The date and time of every distribution are recorded for each report, combined with 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 had been final updated. This time around framework is supposed to ensure the sum total level of loans into the system is at a level that is manageable reducing the time required by DU to find and recover loan casefiles
After that loan casefile is archived from DU, it may not 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 likely be susceptible to the policies in place for the version that is current of. Fannie Mae is certainly not accountable for keeping loan casefiles for the lending company.
Loan Application Sections
The things given just below describe screens regarding the online application for the loan in the DU interface and match parts into the Uniform Residential application for the loan (type 1003):
Area we, style of Mortgage and Terms of Loan
Area II, Topic Property Address and Reason For Loan
Area III, Borrower Information
Area IV, Employment Information
Part V, Monthly Income and Combined Housing Cost
Part VI A, Assets
Part VI R, Property Owned
Part VI L, Liabilities
Part VII, Details of Transaction
Part VIII, Declarations
For guidance in data entry with DU, see the DU Job Aids available on Fannie Mae’s site.
DU Underwriting Guidelines
The after topics describe the underwriting suggestions returned by DU:
General Lender Demands
Whenever underwriting loans with DU, the loan provider must:
Employ prudent underwriting judgment in evaluating whether that loan casefile should always be approved and brought to Fannie Mae;
Verify the precision for the information it submits, making certain so it would not are not able to submit any information that may have affected the DU recommendation had it been understood;
Make sure that the mortgage complies with all the verification messages and approval conditions specified within the DU Underwriting Findings report;
Apply due diligence whenever reviewing the documents when you look at the loan file;
Review the credit file to ensure that the data that DU examined with regards to the borrower’s credit score ended up being accurate and complete;
Determine if there was any possibly derogatory or contradictory information that is perhaps not an element of the information analyzed by DU; and
Do something whenever erroneous information when you look at the credit history or contradictory or derogatory information within the loan file would justify investigation that is additional would offer grounds for a choice this is certainly distinct from the recommendation that DU delivered.
For instance, if a property foreclosure ended up being reported when you look at the credit file but had not been detected by DU (this is certainly, it absolutely was perhaps maybe perhaps not referenced in just about any verification communications), the financial institution must see whether the mortgage complies using the relevant guidelines (see B3-5.3-07, Significant 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 can be associated with this subject.