Fannie
Mae has announced changes in underwriting for loans submitted to its Desktop
Underwriter (DU), Version 10.1. The new
DU version will be implemented on or after the weekend of July 29. The changes are
outlined in release notes issued on Tuesday and will apply to new loan casefiles
submitted to DU on or after the weekend of July 29, 2017. Loan casefiles
created in DU Version 10.0 and resubmitted after the weekend of July 29 will
continue to be underwritten through DU Version 10.0.
Among
the more significant changes accompanying the new version are the following.
-
The maximum allowable debt-to-income (DTI)
ratio that can be submitted in DU will be 50%. For DTIs between 45 and 50
percent, certain additional compensating factors will no longer be
required. Cases exceeding a 50 percent
DTI will receive an "ineligible" recommendation.
-
The criteria that determines
the documentation required to verify a self-employed borrower's income will be
updated and the number of DU loan casefiles eligible for the one year of
personal and business tax return documentation requirements will increase.
-
The maximum allowable LTV,
CLTV, and HCLTV ratios (LTV ratios) for adjustable-rate mortgages will be
aligned with fixed-rate mortgage LTV ratios for all transaction, occupancy, and
property types, up to a maximum of 95%. Additional information on the effective
dates of this change will be available in the Selling Guide.
-
A loan casefile with a
disputed tradeline that is approved with that information will no longer
require further action. If such a loan
casefile does not receive an Approve recommendation, the lender must determine
the accuracy and completeness of the tradeline information. If the borrower is
responsible and the information accurately and completely reports the account,
then the lender may manually underwrite the loan if it is eligible. Tradelines
reported as medical debt will continue to be excluded from the disputed
tradeline identification and lenders are not required to investigate disputes.
-
DU is regularly reviewed to
determine if its risk analysis is appropriate. Version 10.1 will
include an update to this risk assessment and it is expected to increase the
percentage of Approve/Eligible recommendations received by lenders,
particularly those with DTI rations between 45 and 50 percent.
The
new DU version will also contain changes in or will generate new messages about
underwriting issues in the following areas:
-
Income and Employment Updates
-
Property Inspection Waivers
-
Student Loan Cash-Out Refinance
-
Employment Offers
-
Multiple Financed Properties
-
Site Condo Reviews
-
Timeshares
-
Homebuyer Education
Version 10.1 will also support
the final Consumer Financial Protection Bureau rule implementing amendments to
the Home Mortgage Disclosure Act (HMDA) which modified the reportable data
requirements related to collection of information of borrower ethnicity, race,
and gender.
Fannie Mae says that with
the release of the DU Version 10.1, Version 9.3 will be retired. Effective the weekend of July 29, resubmissions
of loan casefiles to the old version will not be accepted although applications
and Underwriting Findings reports will still be available for viewing. To obtain
an updated underwriting recommendation after the retirement date customers must
create a new loan casefile.