Saturday, May 5, 2007 - Fannie Mae – DU Changes

Beginning May 19, 2007 you will see some big changes to Fannie Mae’s Desktop Underwriting (DU) system.

CREDIT STANDARDS MODIFIED FOR HIGH-RISK LOANS

The credit standards for loans underwritten with the assistance of DU will be modified for all loans that have considerable layering of risk (i.e. high CLTV where the borrowers have had significant credit problems in the past).  As a result of this modification, certain high-risk loans that previously would have received an Approve, Refer, or EA-I, EA-II, or EA-III recommendation may now receive a more conservative recommendation.

COLLECTION PAYOFF POLICY MODIFIED FOR CERTAIN DU LOANS

Paying off collection accounts can be a challenge for borrowers with less-than-perfect credit.  Therefore, we are changing our policy for one-unit, owner-occupied loans underwritten with the assistance of DU so that borrowers will NOT be required to pay off outstanding collections – regardless of the amount – provided the collection will not threaten Fannie Mae’s first-lien position.

Note:  Although borrowers will not be required to pay off outstanding collections, DU will continue to consider the presence of collections in its risk assessment.