Fannie Mae Desktop Underwriter Release Notes (DU Version 11.0)
Newrez LLC "Newrez" Approved Correspondent Clients: please note that during the weekend of September 18, 2021 Desktop Underwriter (DU) will be updated for loan casefiles submitted or resubmitted with the following:
Positive Rent Payment History Added to DU Risk Assessment
- When the borrower is currently paying rent of $300 or more, and a 12-month Verification of Asset (VOA) report is obtained, DU will attempt to identify recurring positive rent payment transactions within the VOA report for use in the credit risk assessment.
- This enhanced credit risk assessment will be applied to any loan casefile that meets the following requirements:
- The borrower must be a first-time homebuyer,
- the borrower must have been renting for at least 12 months,
- the borrower’s rent payment must be $300 or more per month,
- the mortgage loan must be a purchase transaction,
- the property must be secured by a principal residence, the borrower(s) must have a credit score, and
- the lender must obtain a VOA report with 12 months of bank statement data through an authorized DU validation service asset verification report vendor.
- If DU is able to identify a rent payment history pattern in the borrower’s bank account data, it will use the rent payment history to positively supplement the credit risk assessment.
In order to ensure DU is able to identify the rent payments, the “Newrez” approved correspondent must:
- Enter the monthly rent paid by the borrower is the DU loan application
- Order a 12 month VOA report and enter the corresponding Reference ID in the DU application, and
- Confirm the borrower is an account holder and that the account from which the borrower pays rent is included in the VOA report
- This option is also allowed for clients submitting to Newrez underwriting as long as the non-delegated client follows the steps above
Credit Score Eligibility in DU
- When more than one (1) borrower is on the loan, DU will use an average median credit score when determining if a loan casefile meets the minimum score requirement of 620.
- At this time, Newrez will not be offering this average credit score feature.
DU Eligibility Assessment Update
- For loan casefiles that receive an Ineligible recommendation when a combination of product features and risk factors are present, and loan casefile does not meet our affordable housing mission, DU will provide additional detail regarding the factors that contribute to the Ineligible recommendation.
DU Validation Service Update for COVID-19 Policy Overlay Removal
The following updates will be made to the DU validation service for loan casefiles submitted or resubmitted on or after the weekend of Sept. 18, 2021:
- Employment validation is being reinstated.
- Vendor reports used to validate income (base, bonus, overtime, commission) and assets will follow standard age of documentation requirements, i.e., may not be more than four (4) months old on the closing date. The DU messages will be updated to provide the “Close by Date” in alignment with these changes.
- The value of market-based assets (specifically investment accounts such as stocks, mutual funds, and retirement funds) will now be considered when validating assets.
Support of the Updated Uniform Residential Loan Application (URLA)
The following new credit types will be included in the interested party contribution message:
- Builder Developer
- Real Estate Agent
- Employer Affiliate
- Lender Affiliate
- Other Interested Party
Self-Employment Income
Currently when a borrower is self- employed, DU uses the income disclosed in the Monthly Income (or Loss) field on the loan application in the total income calculation.
If the ownership share is 25% or more, the income will now be entered in Monthly Income (or loss) based on the lender’s calculation of net income (or loss) from Self Employment.
If the ownership share is less than 25%, the income will now be entered in Gross Monthly Income (base, bonus, overtime, etc.). Schedule K-1 income for these borrowers should be entered as “other” in Gross Monthly income.
Source of Funds Messages
- A new message will be added as a reminder that a grant must come from an entity (e.g., employer, nonprofit, public agency, etc.). If the source of the grant is from an individual the loan casefile will receive an Ineligible recommendation as funds from an individual should be entered as a gift.
- The source of any gift, gift of equity, or grant must be disclosed on the loan application. When a source is not provided, DU will issue a message reminding the lender to ensure that the source of all gifts, gifts of equity, or grants are specified and to resubmit the loan casefile to DU.
- When entering information on new subordinate financing, lenders must provide the source of the subordinate financing. When new subordinate financing is provided and the source is not provided, DU will issue a message reminding the lender to ensure that the source of all new subordinate financing is specified and to resubmit the loan casefile to DU.
Real Estate Information
As commercial real estate, multifamily properties, vacant lots, and farms are not included in the properties subject to the limitations in the policy, additional information on the borrower’s real estate properties is needed to apply the guidelines correctly. Lenders will now be able to provide this additional information. In the Property Information section, after providing the Intended Occupancy for the specific real estate property, the lender can now use the Other Description field to enter the appropriate description prior to submitting the loan casefile. The lender would provide “Commercial,” “Multifamily,” “Land,” or “Farm” in the Other Description field, as applicable.
Resources
Fannie Mae Desktop Underwriter/Desktop Originator Release Notes.