Fannie Mae Underwriting Improvements as of 7/29/17

Fannie Mae has released changes to its Desktop Underwriter “DU” (automated underwriting) guidelines in the following categories:

 

1. Maximum DTI:  Total Debt to Income Ratio is increased from 45% to 50%. 
    
2. Disputed Credit Tradelines:  If DU issues an “Approve” recommendation including disputed tradelines, no further documentation for the disputed tradeline will be needed.  This change will result in faster approvals due to elimination of additional documentation.
    
3. ARM LTV Ratios:  ARM LTV ratios will be increased to be aligned with fixed-rate mortgage LTV ratios for all transaction, occupancy, and property types, up to a maximum of 95%. 
    
4. Self-Employment Income Documentation:  The number of self-employed loans eligible for one year of personal and business tax returns will increase.
    
5. Student Loan Cash-Out Refinance:  Paying off student loans with a mortgage refinance will no longer be considered a “cash out” transaction, potentially saving the refinance borrower anywhere from .25% to .5% on the new mortgage rate.  Previously, when borrowers refinanced mortgages to pay off student loans, the transaction was considered a “cash out” transaction with higher rates for the cash out even though the funds were being used to pay off the student loans. 
    
6. Qualifying New Job Without Paystub:   For primary residence, one-unit, purchase transactions, when borrower has a job offer for a new job but will not start prior to purchase date, borrower is able to obtain the mortgage loan without a paystub with alternate documentation requirements.  In the past, borrower had to have at least one paystub prior to closing.
    
7. Site Condos:  Removed project review requirements for site condos.
    

Submitted By:

 

Diane Pyshos

Sr. Mortgage Consultant, A & N Mortgage Services, Inc.

dianep@anmtg.com    312-909-9718

NMLS #137800   Company ID #19291

Offices in Chicago, IL and Union Pier, MI