Fannie Mae Announces Changes to Underwriting Guidelines
Fannie Mae recently announced new changes to its Desktop Underwriter® (DU®) Version 10.1 in order to make underwriting easier and simpler for mortgage professionals. The new guidelines will be implemented on July 29, 2017.
One of the new changes that will help many borrowers with debt-to-income ratios between 45% and 50%. The DU Version 10.1 maximum allowable debt-to-income ratios (DTI) will be adjusted to consider applications with a maximum DTI of 50%.
Fannie Mae said that for DTIs above 45% and up to 50%, DU will no longer require certain additional compensating factors. If the DTI is above the maximum allowable DTI of 50%, the loan will receive an Ineligible recommendation.
Here is a list of loan categories that will see changes:
DU Risk Assessment Maximum Allowable DTI
ARM LTV Ratios
Self-employment Income Documentation
DU Validation Service
Property Inspection Waiver
Updates to Align with the Selling Guide
Retirement of DU Version 9.3
The new DU Version 10.1 will also include an updated risk assessment and messaging for loan casefiles for borrowers with disputed tradelines. DU will first assess all tradelines reported as disputed by the borrower. Once DU issues approves the loan using the disputed tradelines, no further documentation will be needed.
The maximum loan to value (LTV) ratios for adjustable rate mortgages (ARM) will be aligned with fixed-rate mortgage LTV ratios for all transaction, occupancy, and property types, up to a maximum of 95%. ARM loans with the higher LTV ratios can be delivered as whole loans on or after September 1, 2017, or delivered into MBS with pool issue dates on or after September 1, 2017.
Self-Employment Income Documentation will be updated. The DU validation service will now validate income and employment for a borrower that has both self-employment income that can be validated using tax transcript information and base, bonus, overtime, and/or commission income that can be validated using an income report. If all of the required information is not received (both an income report and tax transcript information), a message will be issued stating that the income and/or employment could not be validated because all documents were not available for income validation
Changes to the Property Inspection Waiver (PIW) will allow loan casefiles underwritten using Preliminary Findings will now be eligible for the PIW offer.
For more information on the changes check out the copy of the Fannie Mae press release.
This letter is for information purposes only and is not an advertisement to extend customer credit as defined by Section 12 CFR 1026.2 Regulation Z. Program rates, terms and conditions are subject to change at any time. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, 4131316 NMLS #237653