Fannie Mae’s automated underwriting system, Desktop Underwriter (DU), evaluates mortgage delinquency danger and gets to an underwriting recommendation by depending on a thorough study of the main and contributory danger factors in a home loan application. (See B3-2-03, Risk Factors Evaluated by DU) It analyzes the information and knowledge into the loan casefile to attain a overall credit risk evaluation to ascertain eligibility for distribution to Fannie Mae.
No body factor determines a borrower’s ability or willingness in order to make their mortgage repayments. DU identifies low-risk factors that will offset factors that are high-risk. When 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 prohibited facets. DU utilizes validated, statistically significant factors which were proved to be predictive of home loan delinquency across all teams.
DU does 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 regulations. Loan providers bear single obligation for complying with relevant regulations, and these conformity responsibilities is almost certainly not imposed upon or provided by Fannie Mae.
Underwriting with DU
Nonetheless, the very first distribution to DU for underwriting purposes must take place before closing of this home loan.
As soon as the home loan or debtor information modifications and it also no further fits the details utilized as soon as the loan casefile ended up being underwritten that is last 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 when you look at the credit file.
If the loan casefile is resubmitted to DU after shutting and just before distribution to Fannie Mae, the lending company accounts for making certain:
All information supplied into the last submission to DU fits the regards to the loan that is closed
The mortgage delivery data matches both the shut loan and the ultimate information submitted to DU; and
The mortgage casefile gets an qualified recommendation from DU from the last submission.
The financial institution may request a credit that is new after shutting as soon as the loan casefile is resubmitted and, as with every loan casefiles, must conform to the Fair credit scoring Act pertaining to the reason and nature for the inquiry. In the event that brand new credit file contains information this is certainly distinct from the knowledge utilized to organize the last application for the loan that has been finalized because of the debtor at closing, the mortgage application needs to be updated. (Borrower signature(s) are not necessary because of the change occurring post-closing. ) The financial institution must consist of both the signed that is final the updated unsigned applications into the loan file.
Note: The credit file must meet with the allowable chronilogical age of papers as of the note date. In the event that credit file expired before the note date and the loan casefile is being resubmitted to DU, a brand new credit file needs to be required.
In some circumstances, the lending company may possibly not be in a position to access the original DU loan casefile for resubmission purposes. Loan providers may develop a brand new loan casefile in DU after closing to make sure that all information into the final DU submission fits the regards to the closed loan, supplied every one of the following conditions are met:
The above mentioned loan provider responsibilities are met, such as the updating associated with the last loan application, if relevant;
The mortgage have not yet been brought to Fannie Mae;
The mortgage gets the information that is samefor 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 qualified suggestion from DU;
The lending company keeps the DU Underwriting Findings Report through the initial loan casefile ID within the loan file;
The DU submission with 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 previously mentioned above, each time a brand new credit history is required, the financial institution complies utilizing the Fair credit rating Act.
In the event that resubmission to DU results in a “ineligible” recommendation, the real estate loan is almost certainly not sent to Fannie Mae.
Note: If the standard control function is completed before distribution, the above needs apply. If quality control is conducted after distribution, refer to D1-3-03, Lender Post-Closing Quality Control report on information Integrity.
DU Underwriting Reports
DU dilemmas two forms of reports:
The DU Underwriting Findings report summarizes the general recommendation that is underwriting lists the steps required for the financial institution to perform the processing regarding the loan file. This really is usually the first report seen by an underwriter or financing officer after 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 most of the information that is same on the Uniform Underwriting and Transmittal Overview (type 1008).
Everytime a loan casefile is resubmitted to DU, the info during these reports is updated with information from the most present distribution. The time and date of each and every distribution are recorded for each report, together 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 mortgage casefile ended up being final updated. This time around frame is supposed to make sure that the full total number of loans when you look at the system are at a workable degree, reducing enough 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 that’s been archived needs to be re-underwritten, a brand new loan casefile needs to be developed and submitted to DU. The loan casefile may 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
Those items given just below describe displays for the online application for the loan in the DU interface and match sections within the Uniform Residential application for the loan (type 1003):
Area we, form of Mortgage and Terms of Loan
Part II, Topic Property Address and Reason For Loan
Part III, Borrower Information
Area IV, Employment Information
Part V, Monthly Money and Combined Housing Cost
Part VI A, Assets
Section VI R, Real-estate Owned
Part VI L, Liabilities
Area VII, Details of Transaction
Area VIII, Declarations
For guidance in information entry with DU, see the DU Job Aids available on Fannie Mae’s internet 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 judgment that is underwriting evaluating whether financing casefile should always be authorized and brought to Fannie Mae;
Verify the precision associated with information it submits, making certain so it would not are not able 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 within the DU Underwriting Findings report;
Apply due diligence whenever reviewing the documents into the loan file;
Review the credit history 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 clearly was any possibly derogatory or contradictory information that is perhaps maybe not the main information analyzed by DU; and
Act whenever erroneous information into the credit file or contradictory or derogatory information when you look at the loan file would justify extra investigation or would offer grounds for a determination that is distinctive from the recommendation that DU delivered.
For instance, if a foreclosure had been cashnetusa locations reported when you look at the credit history but had not been detected by DU (that is, it absolutely was perhaps perhaps not referenced in almost any verification communications), the lender must figure out if the mortgage complies utilizing 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 were released which can be linked to this subject.