Fannie Mae's guide on how to handle tradelines in dispute.
Credit Report Tradelines in Dispute
Fannie Mae has an automated system that assists lenders make informed credit decisions on conventional conforming, non-conforming, and government loans.
That system is called the Desktop Underwriter®, or DU®.
When the DU identifies a disputed tradeline on a borrower's credit report that was not included in the credit risk assessment then the lender must confirm whether or not the tradelines in question are accurate, verifiable, or obselete.
If it is determined that the information is accurate then the disputed tradelines will be considered in the credit risk assessment by pulling a new credit report with the tradeline no longer reported as disputed and either manually underwriting the loan or resubmitting the loan casefile to the DU.
If this is the case then the lender is required to ensure that if a payment is owed for the tradelinethat it is included in the debt-to-income ratio.
If the DU doesn't issue the alert then the lender isn't required to;
- further investigate the disputed tradeline on the credit report
- obtain an updated credit report (with the undisputed tradeline)
- manually underwrite the loan