Written By: NAMP® Op-Ed Ghost Writer
Recently Fannie Mae has issued communication regarding some upcoming changes with Desktop Underwriter (DU), the Single Family Selling Guide, and Collateral Underwriter (CU).
Effective February 23, 2016, Fannie Mae has eliminated the continuity of obligation guideline. This is a policy that was introduced following the great recession to ensure borrowers were properly qualified on refinance transactions. Fannie Mae has since introduced more sophisticated technological developments in DU and CU to identify potential issues. As a result, this guideline is no longer needed.
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Fannie Mae has also updated their definition of a relocation loan for more clarity. Per the new definition, a relocation loan is made under a relocation agreement between the lender and the employer or the employer’s agent. When a borrower is relocating, but is not subject to a lending agreement, the loan will not be recognized by Fannie Mae as a relocation loan.
Fannie Mae has released fillable rental income worksheets. The previous worksheets (Forms 1037, 1038, and 1039) were all pdf documents that could be downloaded, but had to be manually completed.
DU will be updated to Version 10.0 the weekend of June 25, 2016. The new update will allow loans with no credit score to be underwritten through the automated underwriting system (AUS). In other words, this will automate what has traditionally been a manual process for underwriters. To be eligible for automated underwrite, loans without credit scores must meet the following:
• Principal Residence
• One Unit, non-manufactured property
• Purchase or limited cash-out refinance only
• Fixed Rate Mortgage
• Loan amount must be conforming
• LTV/CLTV/HCLTV may not exceed 90%
• DTI must be LESS THAN 40%
• Verification of at least two non-traditional trade lines, one of which must be housing related, with proof of a 12 month payment history
In cases where one borrower has a credit score, but is contributing 50% or less of the qualifying income on the file, DU will require verification of two non-traditional trade lines. If the loan does not meet these requirements, it will receive an Out of Scope recommendation and the loan will require a manual underwrite.
DU is also adding a “Number of Financed Properties” field in the additional data section. If this section is not completed, DU will pull this information from the REO section of the 1003 or from the number of listed mortgages on credit. This will allow DU to automate requirements, including required reserves, for borrowers with multiple financed properties.
DU will issue a message indicating the number of financed properties identified and where that information was obtained. If the information DU has used to determine the number of financed properties is inaccurate, it is the lender’s responsibility to correct the information.
Finally, CU was updated to reflect two new messages. The data discrepancy messages will now identify discrepancies related to property attachment type, condo project descriptions that are inconsistent with the number of stories, and waterfront location discrepancies. A new adjustment message will be issued when the subject property does not have an accessory unit, but prior records indicate an accessory unit is present.
As always, you can view the official release notes on the selling guide, DU, and CU at www.fanniemae.com.
About The Author
All of NAMP® staff writers are veteran mortgage processing & underwriting instructors for Mortgage Underwriter University (www.MortgageUnderwriter.org). They have each conducted numerous mortgage processing & underwriting training classes and have worked in the mortgage banking industry for 25+ years. If you're interested in becoming a writer for NAMP®, please email us at: contact@mortgageprocessor.org
