Fannie Mae will be releasing DU Version 9.2 the weekend of December 13, 2014. New loans submitted to DU on or after December 13, 2014 will be subject to the new guidance. Loans submitted to DU Version 9.1 and resubmitted after the weekend of December 13th will continue to be underwritten through DU Version 9.1.
Highlights of the DU 9.2 release are detailed below.
One Unit Primary Residence Cash-Out Transaction
- The new maximum LTV for a 1-unit primary residence fixed rate cash-out transactions will be 80% (currently 85%). The maximum 75% LTV for an ARM transaction remains the same.
Multiple Financed Properties
Fannie Mae has updated the guidelines for transactions involving a second home or investment property and the borrower has 5-10 financed properties. Fannie Mae removed the additional overlays required on the following topics and now standard Fannie Mae guidance will now apply:
- Waiting periods for derogatory credit (previously no BK or foreclosure in 7 years; now Chapter 7/11 BK 4 years from discharge, Chapter 13 BK 2 years discharge/4 years dismissal, foreclosure 7 years unless extenuating circumstances then 3 years).
- Mortgage payment history (previously 0x30 in past 12 months on any mortgage; now mortgage history must be reviewed for 12 months, mortgages must be current and there can be no ≥ 60 day lates within the previous 12 months).
LTV limitations, credit score and reserve requirements remain unchanged.
Multiple Financed Properties Message Update
The following message will be issued by DU on second home and investment when it appears the borrower has four or more financed properties.
Life Insurance Assets Message
When life insurance payout is used for the down payment or closing costs the borrower’s receipt of funds from the insurance company is required however if the funds are being used for reserves, the cash value must be verified and documented but the funds do not require liquidation and receipt by the borrower.
Pending Sale Property Message
DU will issue a new message on primary residence transactions when a pending sale property is indicated on the 1003 as a reminder that if the property is not sold prior closing, the borrower must meet reserve requirements for pending sale properties.
Excessive Value Messages Modification
The excessive value messages will be updated with a reminder that when an appraisal is submitted to the Uniform Collateral Data Portal (UCDP), the messages from the UCDP and DU may vary since the messages issued by UCDP are based on an analysis of the data provided in the actual appraisal submitted.
No Payment Included Message Update
The message issued by DU when no payment is indicated on the online loan application for a mortgage, HELOC, installment loan, or an unknown liability type is being updated.
The message will be included in the first section of the DU Findings Report and will be updated to indicate the following:
The risk assessment of the loan casefile may not be accurate because the accounts did not have a minimum monthly payment and DU was unable to calculate the DTI. The lender must ensure the DTI used in the risk assessment is accurate, and if a payment must be included in the DTI, the payment amount must be entered on the online loan application and the loan casefile resubmitted to DU.
Updated DU Findings Report
The Summary Section of the DU Findings Report will be updated as follows:
- Borrower generation will be indicated, if applicable
- “Total Expense Ratio