Richard Sweum: New Conventional Loan Standards via DU 9.1
Freddie is following Fannie on all of the major changes (loan to value 95% etc), but what will be interesting to view over the next 2 weeks are the completely new loans that were not run through DU prior to Nov 16th, and what other surprises we might see. In the mortgage lending world, sometimes we refer these subtle and not so subtle tweaks to Fannie (DU) and Freddie (LP) automated underwriting systems as "tightening of the screws" on our borrowers credit profile. One thing that we are expecting is that we are going to be seeing some things such as "layering of risk" come into play rather than just 95% LTV--good, 41% DTI--good, 2 months reserves--good.
Interesting to note, that through the Washington State Housing & Finance Commission, first time borrowers that qualify can still do a 97% HFA (that's right, HFA) loan with state bond/grant send mortgage that exceeds 100% CLTV. Seriously? Yep.
Desktop Originator/Desktop Underwriter Release Notes
DU Version 9.1
August 20, 2013
Updated August 22, 2013
Updated September 10, 2013
Updated October 22, 2013
Updated November 12, 2013
During the weekend of November 16, 2013, Fannie Mae will implement Desktop Underwriter® (DU®) Version 9.1, which will include the changes described below.
The changes included in this release will apply to new loan casefiles submitted to DU on or after the weekend of November 16, 2013. Loan casefiles created in DU Version 9.0 and resubmitted after the weekend of November 16 will continue to be underwritten through DU Version 9.0.
November 12, 2013: The following change is being made to these Release Notes:
The Maximum Allowable Debt-to-Income Ratio and Minimum Credit Score Requirements section on page 4 has been updated to clarify that the lender must determine if the loan casefile is either a higher-priced mortgage loan under Regulation Z, which covers principal residences; or a higher-priced covered transaction under Regulation Z, which covers principal residences and second homes, and only applies to loan applications taken on or after January 10, 2014.
Note: The Selling Guide will be updated to reflect the clarification regarding higher-priced covered transactions in a future guide update, which will apply to both DU Refi Plus and Refi Plus mortgage loans.
October 22, 2013: The following change is being made to these Release Notes:
The New Messages for Foreclosure, Deed-in-Lieu of Foreclosure and Preforeclosure Sale section on page 7 of these release notes has been removed. At this time, DU will not utilize information Fannie Mae has on loans that have been liquidated due to a foreclosure, a deed-in-lieu of foreclosure, or a preforeclosure sale; and the messages based on this information will no longer be added with DU Version 9.1.
Note: The Selling Guide will be updated to reflect this change in a future guide update.
September 10, 2013: The following changes are being made to these Release Notes:
The Maximum Allowable Debt-to-Income Ratio and Minimum Credit Score Requirements sections below have been combined. DU will not apply additional requirements of a maximum debt-to-income ratio (DTI) of 45%, or a minimum representative credit score of 620 to DU Refi Plus loan casefiles that will have an increased principal and interest payment. However, DU will issue a new message on all DU Refi Plus loan casefiles stating that the lender must determine if the loan casefile is a higher-priced mortgage loan (HPML) under Regulation Z, and if so, must manually apply the maximum DTI and minimum representative credit score requirements. Refer to page 4 of these Release Notes for additional information.
The LTV/CLTV/HCLTV Ratio Cap Lowered to 95% section below has been updated to include information on the timeframes in which mortgage loans exceeding the maximum LTV/CLTV/HCLTV ratio of 95% must be delivered to Fannie Mae. Refer to page 5 of these Release Notes for additional information.
Richard Sweum: New Conventional Loan Standards via DU 9.1
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