What are the benefits of the Fannie Mae Desktop Underwriter® (DU®) validation service to the mortgage loan officer?
The DU validation service enables the loan officer to offer an easier documentation process for borrowers and provides for process efficiencies throughout origination. By digitally validating a borrower’s income, asset and employment information, loan officers can reduce the need to collect paper documents from their customers. The time saved by digital data validation may help reduce the overall loan cycle time, allowing borrowers to close on their home faster. This may free up resources, potentially allowing the loan officer to process more loans overall.
How does DU validation service work?
The DU validation service uses information provided by third-party verification reports to validate borrowers’ employment, income and asset data in DU on a per-borrower per-component level. In most cases, the loan officer will not need to collect paper documents for validated employment, income and/or asset data. To learn more about how the DU validation service works within a loan officer’s process check out the sample workflow.
What type of loans are eligible for the DU validation service?
The DU validation service is only available for conventional loans. Non-conforming or government loans (such as VA, FHA, and rural development) are not eligible. Please refer to the asset, income, and employment FAQs sections for more information on what can be validated. There may be additional restrictions for income types and other loan components. Refer to Fannie Mae’s Selling Guide and the DU Validation Service Reference Guide (requires DU, Desktop Originator® (DO®), or Fannie Mae Connect™ credentials) for more detail.
What happens if the DU validation service is not able to validate the information using the verification reports?
Occasionally the DU validation service is not able to validate some information automatically. If that happens, the loan officer will need to follow instructions in the DU message and collect the appropriate documents from the borrower to verify the information manually.
Can a loan officer resubmit a loan to DU to obtain validation if a loan component did not receive validation on the initial submission?
Yes – a loan officer can correct an error or omission, or update data, and resubmit the loan to DU. Resubmission could be due to examples such as the following:
- A matching error with the vendor report could cause DU to be unable to find the report referenced in the submission file. The loan officer can check to ensure the correct loan number, borrower Social Security Number (SSN), or reference number is entered to receive a match.
- The DU message could indicate that a lower amount of income was validated by DU based on the vendor report. In these cases, the lower amount of income can be entered into DU and the file resubmitted to receive validation of income.
Will the loan officer ever need to get financial records from the borrower even after the DU validation service is successful?
An underwriter must review and approve the loan file prior to closing. If a key component of the information cannot be verified digitally for any reason, then it must be done manually. If there is a discrepancy between the loan application and the actual financial records, this difference will require manual validation. This means the loan officer must ask the borrower to produce copies of their financial statements.
What are some tips from loan officers who have been able to shorten loan origination approval time using the DU validation service?
Loan officers that are successful using the DU validation service ensure that all information in the loan application entered into DU is correct and can be supported via independent verification reports. It is important to have accurate information on the loan application submitted to DU to reduce the need to submit additional documentation. The loan officer can check that:
- The borrower’s income is calculated correctly.
- The borrower’s employment information is accurate, and that the employer named entered into DU matches the employer name on the employment verification report.
- The borrower’s name is on all bank accounts used to verify assets.