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Conventional Fannie Mae Updates

Fannie Mae Selling Guide Announcement SEL-2017-06 & DU Version 10.1.

Fannie Mae Selling Guide Announcement SEL-2017-06 & DU Version 10.1.

New Penn Financial is pleased to announce the adoption of the following Fannie Mae selling guide and DU 10.1 release updates:

Maximum Allowable DTI

The maximum allowable debt-to-income ratio (DTI) in DU will be adjusted in the new version, and New Penn will permit this new DTI limit. With the adjustment, DU will consider applications with a maximum DTI of 50%, and will no longer require compensating factors for DTIs above 45% and up to 50%. If the DTI exceeds 50%, the loan casefile will receive an Ineligible recommendation.

DU Refi Plus™ loan casefiles submitted to DU Version 10.1 will continue to be subject to the maximum allowable DTI applied to DU Refi Plus loan casefiles in DU Version 10.0.

Timeshare Accounts

Timeshare accounts may be identified in a borrower’s credit report as being installment debt or mortgage-related debt depending on the individual timeshare. DU will treat timeshares as installment loans rather than mortgage debt, even if they are identified as mortgage debt on the credit report (or other documentation).

Student Loan Clarifications

Fannie Mae will permit the use of a $0 payment for student loans when documentation is obtained to evidence the actual monthly payment is $0 provided the payment is associated with an income-driven repayment plan.

Mortgages Paid by Others

Fannie Mae is updating the Selling Guide to address mortgages paid by others. When a borrower is obligated on a mortgage debt – but is not the party who is actually repaying the debt – the monthly mortgage payment may be excluded from the calculation of the DTI ratio if the party making the payments is obligated on the mortgage debt and can document the most recent 12-month payment history with no delinquencies.

Disputed Tradelines

The new DU version will include updated risk assessment and messaging for borrowers with disputed tradelines.  DU will first assess the risk of the loan casefile using all tradelines reported as disputed by the borrower. When DU issues an Approve recommendation using the disputed tradelines, no further documentation of the disputed tradeline will be needed and the following message will be issued:

The following tradeline(s) were identified by DU as disputed by the borrower. Because DU issued an Approve recommendation when including the disputed information in the credit risk assessment, no further action is necessary.

Creditor

Account Number

Account Type

ABC Creditor

123456789

Installment

 

When the loan casefile does not receive an Approve recommendation using the disputed tradeline in the risk assessment, the risk will then be assessed with the disputed tradeline excluded and DU will issue the following message:

The following tradeline(s) were identified by DU as disputed by the borrower. Because DU was not able to issue an Approve recommendation when including the disputed information in the credit risk assessment, the lender must determine if the disputed account belongs to the borrower and confirm the accuracy and completeness of the information on the tradeline. If the borrower is not responsible for the account or the information on the tradeline does not accurately and completely report the account, no further action is necessary regarding the disputed tradeline. If the borrower is responsible for the account and the tradeline information accurately and completely reports the account the lender may manually underwrite the loan if the transaction is eligible for manual underwriting.

Note:  New Penn does not offer conventional manually underwritten loans.  Therefore, any case file with a Refer recommendation for disputed tradelines, the dispute must be removed from the tradeline, a new credit report generated and updated in DU

Creditor

Account Number

Account Type

ABC Creditor

123456789

Installment

Tradelines reported as medical debt will continue to be excluded from the disputed tradeline identification.  Investigation of disputed medical tradelines is not required.

 

 

The above changes apply to Conventional DU scored loans on or after July 29, 2017.   Refer to the New Penn Financial Conventional Product Profile and/or Fannie Mae’s Selling Guide for all specific requirements.