Fannie Mae adds single asset verification report to desktop underwriting system

Solution will use data from third-parties to validate assets, income and employment in one step

Fannie Mae announced on Wednesday an enhancement to its desktop underwriting system, which will facilitate the asset, income, and employment verification process through a single data source. 

Lenders can use a single 12-month asset verification report to identify recurring deposits in the applicant’s digital bank statement data. The solution will automatically use approved data from third-party vendors to validate income, employment, and assets in one step. It will be available effective March 29. 

With the new functionality, the government-sponsored enterprise (GSE) is “exploring new ways to help our lenders open more doors for aspiring homeowners” and “removing a hurdle from the loan application process,” Cyndi Danko, senior vice president and single-family chief credit officer, said in a prepared statement. 

Lenders can use the same report to check applicants’ rent payments and cash flow history. This may benefit qualified borrowers with limited or no credit history, potentially increasing the number of applicants approved, the GSE said.

Fannie Mae explained that lenders who opt into the DU validation service and leverage asset verification reports with at least 12 months of data may get “clear to close” faster and achieve Day 1 Certainty, which may reduce repurchase risk. In February, Fannie Mae also announced ​ a “notice of potential defect” functionality in the latest version of its system Loan Quality Connect to address buybacks

In a survey of pilot lenders, the GSE also noticed that 50% of them had some level of cost savings over their existing third-party report costs with the single asset verification report.

The enhanced verification process comes after the launching of an early assessment tool to determine buyers’ preparedness and mortgage options without the impact of a hard credit check. It also follows the announcement of an income calculator for self-employed borrowers, and a down payment assistance tool.

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