Fannie Mae has been working to give lenders one-day certainty and it's one step closer with the launch of its enhanced automated underwriting system, Desktop Underwriter.
Set to go live on March 29, these advancements promise improved loan quality control, faster cycle times, and potential cost savings, marking a significant step forward in supporting homeownership opportunities.
"Fannie Mae is continually focused on modernizing the mortgage finance experience and exploring new ways to help our lenders open more doors for aspiring homeowners in a responsible and sustainable way," Fannie Mae Senior Vice President and Single-Family Chief Credit Officer Cyndi Danko said. "With this new update in Desktop Underwriter, we are removing a hurdle from the loan application process and bringing greater speed, simplicity, and certainty to both lenders and borrowers."
Through the integration of a single 12-month asset verification report, the Desktop Underwriter (DU) validation service means that Fannie Mae single-family lenders will be able to seamlessly identify recurring deposits in applicants' digital bank statements, enabling automatic validation of income, employment, and assets in one streamlined step. Moreover, this report allows for the consideration of positive rent payment and cash flow history, particularly benefiting more qualified borrowers with limited or no credit history.
The DU enhancement utilizes approved data from third-party vendors to validate borrowers' assets, income, and employment, offering multiple benefits to lenders opting into the DU validation service. These advantages include expedited "clear to close" timelines, potential cost savings by reducing third-party report expenses and staff time, and the opportunity to achieve Day 1 Certainty, enhancing loan quality and reducing repurchase risk. Additionally, lenders can enhance the homebuyer experience by reducing paperwork burdens and increasing the number of homebuyers receiving "Approve/Eligible" recommendations through automatic cash flow assessments and identification of positive rent payments.
In a survey of pilot lenders, 50% saw some level of cost savings over their existing third-party report costs.
Lenders are encouraged to reach out to their Fannie Mae representatives to explore the enhanced capabilities of DU.
