At the beginning of June, Fannie Mae rolls out the latest version of its Desktop Underwriter software, commonly known as DU.
When the loan officer enters your financial information into the computer, there's a good chance that the machine is running DU. The current version is called DU 5.7, but over the weekend, everyone will be upgraded to version 7.0. That's right -- Fannie Mae skipped version 6 and went straight to 7.
I know you're thinking who cares what version of software Fannie Mae is using. Well, YOU SHOULD!
Desktop Underwriter is different. It's being upgraded to make shrewder lending decisions. DU 7.0 will say "yes" to fewer mortgage applications, and "maybe" to more. Then "maybe" sometimes will turn into "no."
Fannie's chief financial officer, Stephen Swad, told investors this month that "we have significantly tightened underwriting and eligibility standards." That trend continues with DU 7.0, which will make a lot of small changes that could add up to something substantial. Or, as Fannie phrased it in a notice to loan officers and brokers,"DU Version 7.0 will include a comprehensive update to DU's credit risk assessment" that will result in fewer loan approvals.
The new Desktop Underwriter will be more skeptical of borrowers who make down payments of less than 20 percent. Fannie will no longer assume that you're less of a default risk just because your loan has mortgage insurance.
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