Bulletin W1291 – DU Version 9.0 Update Release
This bulletin is a reminder that Fannie Mae will implement DU Version 9.0 the weekend of October 20-21.
- The conforming matrices and guidelines have been updated to align with the changes in the version update.
- Guidelines will apply to all new loan casefiles submitted to DU on or after the weekend of October 20, 2012
- Loan casefiles created in DU Version 8.3 and resubmitted after the weekend of October 20 will continue to be underwritten through DU Version 8.3. Associates will be notified thirty (30) days prior to the date that Version 8.3 is retired.
- Updates include:
- DU Version 9.0 will include an update to the DU credit risk assessment and eligibility requirements. The risk assessment will consider the probability of future serious delinquency, rather than default. Fannie Mae expects this change to have minimal impact on the percentage of eligible recommendations currently received under Version 8.3.
- Updated Condo Project Review Requirements – Limited project reviews will no longer be permitted on principal residences in condo projects when LTV/CLTV/HCLTV is greater than 80%.
- Reserve Requirements – Reserve requirements on 2-4 unit properties will be aligned with manually underwritten loans, a minimum of six (6) months reserves will be required.
- Reduced LTV/CLTV/HCLTV for ARM products – 1-unit properties will be reduced from 97% to 90% on purchase and rate/term refinances. All other property types will be reduced by a full 10% LTV (i.e., cash out will be reduced from 85% to 75%).
- Increased LTV/CLTV/HCLTV for some fixed rate transactions – 2-unit properties will be increased from 80% to 85% on purchase and rate/term refinances.
- Updated Income Documentation Requirements– DU Version 9.0 will align with manual underwriting employment and income policies. Increased documentation (i.e., 2 years income documentation) will be required for borrowers with overtime, commissions, self-employment and second jobs.
- Other Income Sources – DU Version 9.0 will add other sources for capital gains, employment – related assets, foreign income, royalties, seasonal income, temporary leave income and tip income. Appropriate DU messaging will ensure each income type is properly documented.
- Verification of Funds for Thirty (30) day charge accounts – Borrowers with 30-day accounts will need to have sufficient funds to cover the unpaid balance of all outstanding 30 day charge accounts (i.e. American Express). DU Version 9.0 will include these balances in the required cash to close and total funds verified.
- Product guidelines have been posted to the Intranet and can be found at Mortgage Services/Mortgage Lending/Guidelines and Bulletins
Download: Bulletin – #W1291 (PDF)