The changes to this release are intended to help Fannie Mae’s customers better manage default risk; underwrite to current market realities; and provide reasonable, prudent, and sustainable homeownership options to borrowers.
Customers should expect to see:
* A number of changes to DU’s credit risk assessment and eligibility requirements.
* Continue to analyze each loan case file using validated statistically significant variables that have been shown to be predictive of mortgage default; and
* No longer consider the existence of mortgage insurance as a mitigating risk factor when evaluating higher LTV loans, most notably for the purchase of a one-unity property that will be the borrower’s principal residence.
* Improved credit quality across all DE recommendations levels, especially for Expanded Approval (EA’s) recommendations.
* Some loan case files will receive more conservative recommendations, while others may receive improved recommendations when compared to similar loan case files submitted to DU Version 5.7.
* Reduce approve and/or EA recommendation rates, although the overall impact will vary depending on the mix of business the customer submits to DU.
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