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 a thorough 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 info into the loan casefile to achieve a credit that is overall assessment to find out eligibility for distribution to Fannie Mae.
Nobody factor determines a borrower’s willingness or ability to help make his / her home loan repayments. DU identifies low-risk facets that will offset factors that are high-risk. Whenever several high-risk facets are contained in a loan casefile without adequate offsets, the probability of severe delinquency increases.
DU conducts its analysis uniformly, and without respect to race, gender, or other factors that are prohibited. DU utilizes validated, statistically significant factors which were been shown to be predictive of home loan delinquency across all groups.
DU doesn’t evaluate 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 sole obligation for complying with relevant regulations, and these conformity responsibilities might not be imposed upon or provided by Fannie Mae.
Underwriting with DU
Nevertheless, the very first distribution to DU for underwriting purposes must happen before closing of this home loan.
If the home mortgage or debtor information modifications plus it not fits the info utilized once the loan casefile had been underwritten that is last 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 information, DU Tolerances, and Errors when you look at the credit file.
If the loan casefile is resubmitted to DU after closing and ahead of distribution to Fannie Mae, the lending company accounts for making sure:
All information supplied in the last distribution to DU fits the regards to the loan that is closed
The mortgage distribution data matches both the closed loan and the ultimate information submitted to DU; and
The mortgage casefile gets an qualified recommendation from DU in the last submission.
The lending company may request a credit that is new after shutting once 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. 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 upgrade occurring post-closing. ) The financial institution 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 allowable chronilogical age of papers at the time of the note date. In the event that credit history expired ahead of the note date while the loan casefile will be 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 develop a brand new loan casefile in DU after shutting to ensure all information within the last DU submission fits the regards to the shut loan, supplied 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 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 ahead of shutting making use of another loan casefile, and therefore loan casefile received a qualified suggestion from DU;
The financial institution retains the DU Underwriting Findings Report through the initial loan casefile ID when you look at the loan file;
The DU submission utilizing the loan that is new happens a maximum of 60 times after shutting (on the basis of 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 lending company complies because of 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 conducted before distribution, the above needs use. If quality control is completed after distribution, refer to D1-3-03, Lender Post-Closing Quality Control article on information Integrity.
DU Underwriting Reports
DU issues two kinds of reports:
The DU Underwriting Findings report summarizes the general recommendation that is underwriting lists the steps essential for the lending company to perform the processing i loved this regarding the loan file. It is 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 research report contains most of the same information required on the Uniform Underwriting and Transmittal Overview (type 1008).
Each and every time a loan casefile is resubmitted to DU, the knowledge during these reports is updated with information through the many submission that is recent. The date and time of every distribution are recorded for each report, combined with 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 framework is supposed to ensure the sum total amount of loans into the system reaches a workable degree, decreasing the full time required by DU to find and recover loan casefiles
After that loan casefile is archived from DU, it is not restored. If financing casefile that’s been archived should be re-underwritten, a brand new loan casefile should be developed and submitted to DU. The mortgage casefile is likely to be at the mercy of 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 below describe displays associated with online application for the loan in the DU interface and match parts into the Uniform Residential application for the loan (type 1003):
Part 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
Area V, Monthly Money and Combined Housing Expense
Part VI A, Assets
Part VI R, Property Owned
Area 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 site.
DU Underwriting Suggestions
The topics that are following the underwriting guidelines 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 ought to be authorized and brought to Fannie Mae;
Confirm the precision associated with information it submits, making certain 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 messages and approval conditions specified into the DU Underwriting Findings report;
Apply due diligence whenever reviewing the documents when you look at the loan file;
Review the credit history to ensure that the data that DU examined with regards to the borrower’s credit score had been accurate and complete;
See whether there was any potentially derogatory or contradictory information that is perhaps perhaps maybe not the main 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 determination this is certainly distinctive from the recommendation that DU delivered.
For instance, if a property property foreclosure ended up being reported within the credit file but wasn’t detected by DU (that is, it absolutely was maybe maybe perhaps not referenced in almost any verification communications), the financial institution must see whether the mortgage complies using the relevant guidelines (see B3-5.3-07, immense Derogatory Credit Events — Waiting Periods and Re-establishing Credit).
The dining table below provides sources into the notices and Release Notes which were granted which can be pertaining to this subject.