Fannie Mae Provides Day 1 Certainty; New Enhancement Further Streamlines Mortgage Origination Process for Lenders and Homebuyers

WASHINGTON, DC – Fannie Mae (FNMA/OTCQB) today announced new capabilities in its automated underwriting system to further streamline the mortgage origination process for lenders and homebuyers, enabling improved loan quality control, faster cycle times, and potential cost savings. This enhancement to Desktop Underwriter® (DU®) is the latest solution from Fannie Mae to support lenders and responsibly expand opportunities for homeownership.

Effective March 29, 2024, Fannie Mae single-family lenders can use a single 12-month asset verification report in the Desktop Underwriter validation service to identify recurring deposits in the applicant’s digital bank statement data to automatically validate income and employment, as well as assets, in one step. The same report also can be used to identify and consider the applicant’s positive rent payment and cash flow history, which may benefit more qualified borrowers who have limited or no credit history.

“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,” said Cyndi Danko, Fannie Mae Senior Vice President and Single-Family Chief Credit Officer. “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.”

The new DU enhancement uses approved data from third-party vendors to validate the borrower’s assets, income, and employment. Lenders who opt into the DU validation service and leverage asset verification reports with at least 12 months of data may take advantage of several benefits, including getting to “clear to close” faster, the possibility for improved cost savings by reducing third-party report expenses and staff time*, and the ability to achieve Day 1 Certainty® when income, employment, and/or asset information is validated, which may increase loan quality and reduce repurchase risk. Lenders also can offer a better homebuyer experience by reducing the paperwork burden on mortgage applicants, and they may be able to increase the number of homebuyers who receive an Approve/Eligible recommendation in DU through an automatic cash flow assessment and identification of positive rent payments**.

Fannie Mae remains committed to expanding opportunities for those who are ready to purchase a home and maintain a mortgage. Recent innovations include:

• An enhanced pre-qualification experience through the DU early assessment to help lenders determine homebuyer preparedness and mortgage options earlier without the impact of a hard credit check on the consumer.
• An income calculator to help mortgage lenders automate the calculation of self-employment income streams during the underwriting process for homebuyers who don’t have traditional sources of income.
• A down payment assistance tool to help homebuyers find the down payment and closing cost assistance they need.
• Fannie Mae’s award-winning HomeView® and HomeView en Español, providing consumers and first-time homebuyers with educational tools and information about financial literacy and homeownership.

Lenders are encouraged to contact their Fannie Mae representative to learn how to get started with DU’s enhanced capabilities and other Fannie Mae products and resources.

*In a survey of pilot lenders, 50% saw some level of cost savings over their existing third-party report costs. Customer results may vary.

**DU will consider positive rent payment history for certain first-time homebuyers who have a credit score, as well as assess a borrower’s cash flow for certain loan casefiles if no borrower has a credit score, if a 12-month asset report is present.