Through automated verifications, sellers of residential loans to the Federal National Mortgage Association can immediately avoid the risk of mortgage repurchases.
Fannie Mae unveiled Monday its Day 1 Certainty offerings that promise lenders freedom from representations and warranties on key aspects of the origination process.
The secondary mortgage lender said the initiative provides validation of assets, employment and income through its automated underwriting system, Desktop Underwriter.
Fannie’s customers will be provided with
tools to reduce risk and improve the experience they provide to borrowers. Application data will be validated up front — providing lenders with faster and easier verification of key loan data components.
In addition, prospective borrowers can save time by using electronic data instead of collecting
documents like paystubs, bank statements and investment account statements.
While income validation is immediately available, asset and employment validation won’t be available until Dec. 10.
Another new enhancement is the ability to use DU to obtain a waiver of
Fannie’s property inspection requirement for many refinance transactions.
The inspection waiver starts on Dec. 10.
“Together, these innovations deliver greater speed, simplicity, and certainty to lenders and borrowers,” the announcement said. “They also bring stronger risk management and promote greater digitization of data and processes to the mortgage industry.”
In addition, Fannie
will provide freedom from representations and warranties on appraised values through its Collateral Underwriter.
When a property receives a Collateral Underwriter risk score of 2.5 or lower, lenders will receive representation and warranty relief for the appraised value of the property.
With this improvement, the Washington-based company says lenders can
focus more of their attention on high-risk appraisals. Appraisers, meanwhile, will have fewer underwriter requests for correction and clarification.
The
Collateral Underwriter freedom from representation and warranty for appraised value starts on Dec. 10.
“Day 1 Certainty is a major step forward in helping our customers transform the mortgage origination process,” Fannie Mae President and Chief Executive Officer Timothy J. Mayopoulos stated in the news release. “Ultimately, we want our customers to have the confidence to lend, so that more qualified borrowers have access to affordable mortgage credit.”
