Fannie Mae’s automated underwriting system, 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 a home loan application. (See B3-2-03, Risk Factors Evaluated by DU) It analyzes the knowledge within the loan casefile to achieve a credit that is overall evaluation to ascertain eligibility for distribution to Fannie Mae.
No body factor determines a borrower’s ability or willingness to create his / her mortgage repayments. DU identifies lenduploans low-risk facets that may offset high-risk facets. Whenever a few high-risk facets are contained in that loan casefile without adequate 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 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 status that is potential a qualified home loan under relevant legal guidelines. Lenders bear sole duty for complying with relevant legal guidelines, and these conformity responsibilities may possibly not be imposed upon or provided by Fannie Mae.
Underwriting with DU
However, the submission that is first DU for underwriting purposes must happen before closing of this home mortgage.
If the home mortgage or borrower information modifications and it also no further fits the data utilized if the loan casefile ended up being last underwritten with DU, the lending company must upgrade the information and resubmit the mortgage casefile to DU. Exceptions are specified in B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors when you look at the credit file.
Whenever loan casefile is resubmitted to DU after shutting and just before distribution to Fannie Mae, the financial institution is in charge of making certain:
All information supplied when you look at the last distribution to DU fits the regards to the loan that is closed
The mortgage distribution data matches both the loan that is closed the ultimate information submitted to DU; and
The mortgage casefile gets a qualified recommendation from DU from the submission that is final.
The financial institution may request a brand new credit file after shutting as soon as 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 for the inquiry. In the event that new credit file contains information that is distinct from the information and knowledge utilized to get ready the last application for the loan that has been finalized because of the borrower at closing, the mortgage application must certanly be updated. (Borrower signature(s) are not essential as a result of improvement occurring post-closing. ) The lending company must add both the final signed and the updated unsigned applications when you look at the loan file.
Note: The credit file must meet with the age that is allowable of as of the note date. In the event that credit file expired ahead of the note date while 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, supplied all the following conditions are met:
The aforementioned loan provider responsibilities are met, like the updating associated with loan that is final, if relevant;
The mortgage have not yet been brought to Fannie Mae;
The mortgage gets the information that is samefor instance, the exact 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 an eligible suggestion 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 with the brand new loan casefile occurs only 60 times after shutting (on the basis of 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 history is required, the financial institution complies aided by the Fair credit scoring Act.
In the event that resubmission to DU results within an “ineligible” recommendation, the real estate loan might not be sent to Fannie Mae.
Note: If the standard control function is completed before distribution, the above demands use. If quality control is completed after distribution, refer to D1-3-03, Lender Post-Closing Quality Control writeup on information Integrity.
DU Underwriting Reports
DU dilemmas two kinds of reports:
The DU Underwriting Findings report summarizes the general recommendation that is underwriting lists the steps required for the lending company to perform the processing associated with loan file. This is certainly often 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 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 knowledge within these reports is updated with information through the many present distribution. The date and time 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 final updated. This time framework is supposed to ensure the full total number of loans within the system are at a manageable degree, decreasing the time required by DU to find and recover loan casefiles
After that loan casefile is archived from DU, it is not restored. If that loan casefile that is archived should be re-underwritten, a loan that is new should be produced and submitted to DU. The mortgage casefile will soon be at the mercy of the policies in effect when it comes to version that is current of. Fannie Mae just isn’t accountable for keeping loan casefiles for the lending company.
Loan Application Sections
The things the following describe displays of this online application for the loan in the DU interface and match parts within 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 Money and Combined Housing Cost
Part VI A, Assets
Part VI R, Property Owned
Area VI L, Liabilities
Section VII, Details of Transaction
Part VIII, Declarations
For guidance in data entry with DU, see the DU Job Aids available on Fannie Mae’s web site.
DU Underwriting Guidelines
The topics that are following the underwriting suggestions returned by DU:
General Lender Needs
When underwriting loans with DU, the loan provider must:
Employ prudent judgment that is underwriting evaluating whether that loan casefile should really be approved and brought to Fannie Mae;
Verify the precision regarding the information it submits, making sure it been known that it did not fail to submit any data that might have affected the DU recommendation had;
Make certain that the mortgage complies with all the verification communications and approval conditions specified into the DU Underwriting Findings report;
Apply due diligence whenever reviewing the paperwork into the loan file;
Review the credit history to verify that the data that DU examined according to the borrower’s credit score had been accurate and complete;
Determine if there was any possibly derogatory or contradictory information that is maybe perhaps not the main information analyzed by DU; and
Act when erroneous information into the credit file or contradictory or derogatory information within the loan file would justify extra research or would offer grounds for a choice that is distinctive from the recommendation that DU delivered.
For instance, if a property property foreclosure was reported into the credit file but had not been detected by DU (this is certainly, it absolutely was perhaps maybe perhaps not referenced in virtually any verification communications), the lending company must figure out if the loan complies with all the relevant guidelines (see B3-5.3-07, immense Derogatory Credit Events — Waiting Periods and Re-establishing Credit).
The dining table below provides recommendations into the notices and Release Notes which have been given which are linked to this subject.