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Fannie Mae Automated Underwriting (DU) Eligibility Changes

Kim Neilson our Senior Vice President just released some information to all our Loan Officer about Industry Changes that will be happening over the next two to three months. These are changed that will affect many of us in the Real Estate Industry, especially the change that I am writing about in this blog, Fannie Mae Automated Underwriting (DU) Eligibility Changes. If all of us are up to date on the up coming changes, than we can all better serve and advice our Borrowers and Buyers.

This first change, Fannie Mae Automated Underwriting (DU) Eligibility Changes, is going to have a major impact on 2 Unit Multi-Family Properties, and the sooner the word gets out about it the better. Fannie Mae will be releasing Automated Underwriting (DU) Version 8.0 on December 12. Changes included with the release are as follows:

Minimum FICO score 620 (was 580)
2 Unit Owner Occupied Property - maximum LTV 80% for purchase & rate/term refinance (was 90%)
2 Unit Owner Occupied Property - maximum LTV 75% for cash out refinance (was 85%)
2 Unit Investment Property - maximum LTV 75% for purchase & rate/term refinance (was 80%)
Unit Investment Property - maximum LTV 70% for cash out refinance (was 75%)

All new cases submitted to DU on or after December 12 will be scored with the 8.0 version and the new eligibility will be applied. New cases submitted prior to December 12 will be scored with the current version DU 7.1 and will continue to score as DU 7.1 on subsequent submissions, however, loans using DU version 7.1 must close by February 12, 2010.

Similar changes were already put in place several months back on 3 & 4 Unit Multi-Family Properties, and those requirements will continue as is. These changes continue to make FHA an even more attractive loan product for Multi-Family Owner Occupied Properties (FHA does not do loans on Non-Owner Occupied Properties), and making Conventional Loans even tougher to do.

Tomorrow I will write about the second change that will go into affect very soon. Stay tune!!!

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, andConventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Posted by George Souto on 10/26/2009 04:17 PM

Comments (25)

Fannie Mae Changes for Multiple Investment Properties in the Mortgage / Finance Channel

fha mortgages, chfa mortgages, conventional mortgages, usda mortgages, connecticut, middlesex county middletown, cromwell, portland

Originally posted at: George's Blog: Fannie Mae Automated Underwriting (DU) Eligibility Changes

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25 Comments on Fannie Mae Automated Underwriting (DU) Eligibility Changes

OCT

George,

More changes... I guess I should buy now if I want to get the better rate?

Ann Hayden in RAINY Wildwood, MO

This seems reasonable George and buyers have already been prepared from us working with regular mortgage brokers... Investors too. We appreciate your current updates though!

George,

Thank you for the heads up.

So we've cured another non-problem, much to everyone's determent!

Bill

When is the last time you wrote a mortgage on a 2 family house using a conventional mortgage? These changes are not applicable to most of my clients.

Ann, the rates are fine, it is the regulations that keep on getting tougher and tougher.

Diane it is becoming hard to do Conventional Loans on Multi-Family Properties. FHA is still very do able, but I would not be surprised if we saw changes to start with them also.

Bill I think the only thing that we have cured is to increase Fannie Mae's cash flow, and reduce our Borrowers cash flow :) :)

Phil oddly enough I have done a about three over the last few months, and I had to work my butt off on each one. The reg's were already tough and these are not for the better.

George,

Fannie Mae is tightening things up a bit. That was kind of expected as they still are suffering losses.

Esko if they keep on going in this direction they will not need to worry about losses, because no one will be doing any conventional loans.

OCT

George your updates are so appreciated. I will bookmark this to refer back to.

George,

I am still fighting this ugly cold from last week so I haven't been on as much, just trying to manage my clients at this point. I appreciate your blogs so much, they are so full of important information. I want to re-blog and print out so as to give this info to my clients.

Yesterday I submitted a withdrawl for a client on a 2 Multi unit. We were scheduled to close today and only thursday discovered it was in a flood zone which wasn't disclosed. After an extention to reseach insurance decided to withdraw, this whole season has been issues like this, ugh.

George, I am always happy to see you on the Rain, as a faithful fan I learn so much. :) :)

George, I just heard about this. Thanks for putting it in writing.

Jennifer I hope it comes in useful to you in the future.

Debbie I hope you start feeling better, being sick is no fun. I know what you mean about the issues, and the flood insurance one can be a very costly one. You have made a fan of me as well :)

Anthony your welcome. We all need to do our part in sharing with each other the changes that we are aware of.

George.. Everyone is tightening their belts.. why not Fannie Mae? It will just make it harder on realtors and buyers. Now there will be less people that qualify.. that could before.

valerie osterhoudt

OCT

As always, I appreciate the information you provide that realtors need to keep on top of for their clients. Knowing this kind of info in advance is so helpful in providing direction to my clients.

See you tomorrow at the luncheon.......

Good to know.

Thanks for keeping us up to date on financing guidelines. It's very helpful to have a clear summary!

It is amazing how we are going back to the "old school" way of underwriting guidelines. Those were before my time but everytime I discuss this with industry vets they always seem to say "That's the way it used to be". And perhaps I shouldn't say it's "amazing". Its probably a good thing.

I am glad they are making it easier for the little people to get help in this crisis.

Hmmm DU or DUI as in Driving Under the Influence of Change? Thanks for the updates.

Thanks for the heads up, George. Can't wait to see what the second post will tell about new changes. Seems mortgages are becoming more difficult to qualify for. Just wait until the interest rates start to climb. Someone said, real estate is changed forever.

Boulder City Steve

Valerie that is why it is so important to stay on top of the rules, so that we can keep on qualifying them.

John and you know how to reach me if you have questions on anything that I have not covered

Ben, thank you.

Catherine, it helps me also to put it down like this.

Kevin and these changes will most likely change back to what they just were, and you will be the one say to new reps, yep that is the way it use to be :)

Gene, it is not easy, but if we understand the rules then at least the little people might still have a chance.

Lyn I like that DUI. With some of the resent changes it does leave me wondering if those that have made the changes are under the influence ....... LOL

Steve I have posted the other two changes, take a look at them when you have a chance.

Thanks for the updates.

Thanks for the info George. Things hardly ever get easier.

When do you think all this tighting up wil end. I just lost my first deal due to financing. I am afraid there will be more to come.

OCT

Mark your welcome.

Tigard, it will once again, but for right now we need to adapt.

Jirius, that is hard to say, but until then Realtors are going to try to make sure that their Buyers are dealing with Loan Officers that understand the rules and know what they are doing.

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