Fannie DU 8.2 Updates?Impacting You & Your Real Estate Agents Karen Deis, Publisher, www.MortgageCurrentcy.com The biggie this month is the implementation of DU 8.2?Okay so the rules have been in effect for the last 60 days, but Fannie has just gotten around to programming them into your desk top underwriting. In fact, this update is so massive that Fannie, for the first time we can remember, issues an FAQ to explain what some of the changes really mean! So, here are just a few of the changes! Foreclosure Waiting Periods - On February 1, 2010, the waiting period for a consumer to t apply for another loan, after a foreclosure will be increased from 5 years to 7 years. While this might not apply to many clients YOU are working with right now, I suggest that you get the word out to real estate agents ? and more importantly, send a press release to your local news reporters and let them know that people who fall into this category, have about 2 months before they have to wait another 2 years! Remember, both Fannie & Freddie have shorter waiting periods for extenuating circumstances; short sales and deed in lieu of foreclose. You?ll find a Fannie/Freddie Derogatory Credit Waiting Period Chart on the charts/checklists pages. Revolving Debt - Remember when you could submit the loan, with credit cards ?to be paid off? in order to get them to qualify for the loan? Well, if the debt is to be paid off prior to closing, you need documentation that the account has also been CLOSED. If the account has not been closed, that a minimum monthly payment (based upon the latest balance, must be included in the ratios) If it?s being paid off AT closing, it must appear on the HUD 1, along with a payoff statement, and the account has been CLOSED. So, doesn?t this go against everything we?ve been taught about credit scoring? Don?t close credit card accounts? This new requirement is going to impact your client?s credit scores after closing? Again, Fannie?s ruining the credit scores with this ?close the account? requirement. Don?t screw up a closing date because the borrower did not close the account?or get you a payoff statement ? have them close the account NOW, verify it, and order the payoff statement right away. Employment - If your borrower is starting a new job, Borrowers no longer have to be employed 30 days in order to be underwritten DU, (instead of manual underwriting) including the requirement that they have to provide 30-day pay check stubs. And the 10-day employment verbal verification has to change to 10 BUSINESS days from 10 continuous days. And here?s another change for how to determine if a person is self-employed ? Fannie used to say that to be considered self-employed, the ownership must be GREATER than 25%. As of December 13, it?s been updated to say 25% or greater so check your files if you have self-employed pre-qual files that you now have to get full tax returns. Simplified High LTV - So, Fannie has eliminated the term ?Flexible Mortgages? and now it?s just called High LTV Transactions. Bottom line, it?s the 97 % LTV loan for, both purchases and limited cash-out refis Verifying property address - Just one more thing for your processing/underwriting staff to add to their growing list of things to check ? the property address on the appraisal matches the USPS address records. How to prove that it has been checked? Maybe a screen shot of the page ? Or the URL link page that it appears on? You just gotta prove that you checked it! www.MortgageCurrentcy.com is a monthly ezine with all the mortgage rule and regulation changes that affect loan officers and their real estate agent buddies. Try out for $1 for 7 days. Cancel any time
