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Fannie Mae's New Software Widens Credit Opportunities

Wider credit opportunities are now available for mortgage shoppers as Fannie Mae announced the implementation of Desktop Underwriter (DU) Version 10.0, the newest version of the industry's leading automated underwriting system.

Desktop Underwriter 10.0 provides more simplicity and certainty to lenders through the use of trended credit data for enhanced credit risk assessment and new automated underwriting capabilities to serve borrowers with no traditional credit and for borrowers with multiple financed properties. Fannie Mae's use of trended credit data will be the first widespread use in the mortgage industry, and will benefit both consumers and lenders.

Brokers should note that in the new version the “trended” credit data will be used by the DU risk assessment to evaluate how the borrower manages his or her revolving credit card accounts. A borrower who uses revolving accounts conservatively (low revolving credit utilization and/or regular payoff of revolving balance) will be considered a lower risk. A borrower whose revolving credit utilization is high and/or who makes only the minimum monthly payment each month will be considered higher risk. So this will help our broker’s clients who pay their bills off every month.

Traditional DU is likely better if a client has a no-score approval because it goes off the actual credit scores. Non-traditional DU assumes the worst credit score bucket of 620-639, offering the most expensive pricing. And the credit data being added to residential mortgage credit report gives consideration to borrowers who pay their credit card balances off each month.

Desktop Underwriter 10.0 enhancements include:

Use of Trended Credit Data in Credit Risk Assessment

  • Considers the monthly payment amounts that a consumer has made on revolving accounts, such as credit cards, over the past two years.
  • Offers lenders more insight into how a borrower tends to pay off their revolving credit lines each month, providing a more comprehensive risk assessment.
  • Gives borrowers greater ability to control their credit evaluation, and benefits borrowers who regularly pay off, or pay more than the minimum required amount, of their revolving debt, increasing the likelihood that they will receive an "Approve" recommendation from DU.

Automated Underwriting for Borrowers with No Traditional Credit

  • Helps lenders more efficiently serve borrowers who do not have a traditional credit history.
  • Helps lenders reduce costs by automating and streamlining a previously manual and time-consuming underwriting process.
  • Requires verification of at least two nontraditional credit sources, one of which must be housing-related.

Automated Underwriting for Borrowers with Multiple Financed Properties

  • Provides lenders with a simplified multiple financed properties policy.
  • Simplifies the underwriting process for lenders and improves operational efficiency.
  • Helps ensure fewer eligibility overlays, automates remaining eligibility requirements, and determines required reserves for all financed properties.