Fannie Maeâ€™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 information and knowledge when you look at the loan casefile to achieve a general credit danger evaluation to ascertain eligibility for delivery to Fannie Mae.
Nobody factor determines a borrowerâ€™s ability or willingness to create his / her mortgage repayments. DU identifies low-risk facets that will 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 other factors that are prohibited. DU utilizes validated, statistically significant variables which have been been shown to be predictive of home loan delinquency across all teams.
DU doesn’t assess a loanâ€™s compliance with federal and state laws and regulations including, without limitation, a loanâ€™s status that is potential a qualified home loan under relevant legal guidelines. Loan providers bear single obligation for complying with relevant legal guidelines, and these conformity responsibilities is almost certainly not 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 mortgage.
Once the home loan or debtor information modifications also it no further fits the info utilized if the loan casefile had been final underwritten with DU, the financial institution 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 history.
Once the loan casefile is resubmitted to DU after shutting and just before distribution to Fannie Mae, the lending company is in charge of making certain:
All information supplied into the last distribution to DU matches the regards to the shut loan;
The mortgage distribution data matches both the loan that is closed the ultimate information submitted to DU; and
The mortgage casefile receives an eligible recommendation from DU in the last distribution.
The financial institution may request a brand new credit history after shutting if the loan casefile is resubmitted and, as with every loan casefiles, must adhere to the Fair credit scoring Act with regard to the reason and nature for the inquiry. In the event that brand new credit file contains information that is unique of the info utilized to organize the ultimate application for the loan which was finalized because of the debtor at closing, the mortgage application must certanly be updated. (Borrower signature(s) are not essential as a result of the enhance occurring post-closing. ) The financial institution must consist of both the final signed and the updated unsigned applications into 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 before the note date plus the loan casefile will be resubmitted to DU, a brand new credit file should 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 new loan casefile in DU after shutting to make sure that all information into the last DU submission fits the regards to the shut loan, supplied all 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 have not yet been sent 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 making use of 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 making use of the loan that is new happens a maximum of 60 days 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 mentioned above, when 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 â€śineligibleâ€ť recommendation.
Note: If the product quality control function is conducted before distribution, the requirements that are above. If quality control is carried out after distribution, refer to D1-3-03, Lender Post-Closing Quality Control writeup on information Integrity.
DU Underwriting Reports
DU dilemmas 2 kinds of reports:
The DU Underwriting Findings report summarizes the general underwriting recommendation and lists the steps essential for the lending company to perform the processing regarding the loan file. It is usually the very 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 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 in these reports is updated with information through the many current distribution. The time and date 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 make sure that the sum total number of loans into the system are at a manageable degree, decreasing the full 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 which has been archived should be re-underwritten, a brand new loan casefile should be developed and submitted to DU. The mortgage casefile will likely to be susceptible to the policies in place for the present type of DU. Fannie Mae isn’t in charge of keeping loan casefiles for the financial institution.
Loan Application Sections
Those items the following describe displays associated with the loan that is online in the DU interface and correspond to parts into the Uniform Residential application for the loan (type 1003):
Part we, style of Mortgage and Terms of Loan
Area II, Subject Property Address and Purpose of Loan
Part 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
Section VII, Details of Transaction
Part VIII, Declarations
For guidance in information entry with DU, see the DU Job Aids available on Fannie Mae’s site.
DU Underwriting Guidelines
The topics that are following 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 financing casefile should really be authorized and brought to Fannie Mae;
Verify the precision for the information it submits, making certain so it would not neglect to submit any information which may have affected the DU recommendation had it been understood;
Make certain that the mortgage complies with all the verification communications and approval conditions specified within the DU Underwriting Findings report;
Apply diligence that is due reviewing the paperwork within the loan file;
Review the credit history to verify that the data that DU examined according to the borrowerâ€™s credit score had been accurate and complete;
Determine if there is certainly any possibly derogatory or contradictory information that is maybe maybe 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 when you look at the loan file would justify investigation that is additional would offer grounds for a choice that is distinctive from the recommendation that DU delivered.
For instance, if a foreclosure had been reported within the credit history but had not been detected by DU (that is, it absolutely was maybe maybe perhaps not referenced in almost any verification communications), the financial institution must figure out if the mortgage complies because of the relevant guidelines (see B3-5.3-07, immense Derogatory Credit Events â€” Waiting Periods and Re-establishing Credit).
The dining dining dining table below provides sources towards the notices and Release Notes which have been released which are associated with this subject.