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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.
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.
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.
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.
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:
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.
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 traditional loan process can be a hassle for borrowers due to the long process of having to gather and manually email or fax paystubs, W-2s, bank information, etc. The DU validation service can reduce or potentially eliminate the need to collect paper documents, which may help reduce loan cycle time. To maximize the benefit to the borrower, we recommend the lender attempt validations early in the process, before asking the borrower to collect income, employment, or asset documentation in hard copy.
Similar to needing permission to run a borrower’s credit information, a loan officer needs a borrower’s consent to order the income, employment and asset verification reports.
If a borrower is more comfortable with a traditional paper process, they may choose to provide the required documents.
Asset types | Required documentation |
---|---|
Checking / savings | Asset verification report |
CD | Asset verification report |
Money market | Asset verification report |
Stock | Asset verification report |
Mutual funds | Asset verification report |
Retirement accounts | Asset verification report |
The loan officer will never receive access to the borrower’s accounts or see their login information, similar to submitting taxes online or online banking. In fact, this process uses the borrower’s financial institution’s secure login process. For asset verification, when the loan officer orders the asset report, the report provider will send the borrower an email or link that directs the borrower to a secure portal where the borrower can login and specify the accounts they need to use to generate the report. While the loan officer can view the vendor generated report, at no time will they have access to the borrower’s account or credentials.
This process eliminates the need for the borrower (and their spouse/co-borrower) to go to each of their accounts and download/print and scan statements for each account and then email them to the loan officer. This saves time and removes the hassle in collecting documents. The borrower can also indicate which accounts and financial institutions’ assets will appear in the report.
The loan officer can never view, nor will they request, the borrower’s user ID and password to any of their accounts. The borrower logs in directly to their financial institution privately through a third-party technology service provider. This login process uses the borrower’s financial institution’s login security layer. So, for example, if their institution has a two-factor login for any of their accounts (password and PIN), that will also apply for this process. It is similar to providing financial information when purchasing items online.
In most cases, asset verification starts with the borrower receiving an email from the verification provider. The loan officer can help the borrower understand what to expect by:
Check out the loan officer DU validation service sample workflow to understand more about how the process works.
Yes, the loan must close within 120 calendar days of the report date by which assets are validated.
DU issues messages based on the results of DU’s validation process.
Yes. If any borrower on the loan is using employment-related assets as income, the loan is not eligible for asset validation.
To get asset validation, the borrower assets that DU calculates based on information from the asset verification report must be greater than or equal to the Total Funds to be Verified amount input into DU. Refer to the DU Validation Service Reference Guide for more information.
Income types | Required documentation |
---|---|
Base pay | Employment and income verification report |
Bonus pay | Employment and income verification report |
Overtime | Employment and income verification report |
Commission | Employment and income verification report |
Social Security | Tax transcripts |
Retirement (pension, annuity) | Tax transcripts |
Self-Employed income (sole proprietor, Sched C) | Tax transcripts |
*DU will only validate eligible income types entered into DU by the lender.
Yes, the loan must close within 120 calendar days of the report date by which income is validated.
DU issues messages based on the results of DU’s validation process.
The loan officer is responsible for entering the appropriate amount of income in DU based on a review of the vendor report and any supplemental information it may have in the loan file (including the application or any other income documentation the borrower may have provided). If at any time the loan officer discovers any conflicting or contradictory information, the loan officer must investigate the information, including obtaining additional documentation if necessary, and enter the appropriate information in DU.
In each of the above cases, if the loan officer relies solely on the information on the vendor report, disregarding the supplemental information contained in the loan file, the representations and warranties enforcement relief related to validated data will not apply, regardless of whether DU validated the income. The loan officer will need to document the amount of income entered in DU.
Employment associated with income types | Required documentation |
---|---|
Base pay | Employment and income verification report |
Bonus | Employment and income verification report |
Overtime | Employment and income verification report |
Commission | Employment and income verification report |
Yes. If you run an income validation report you will automatically see the employment validation messaging in DU. DU can use either a verification of income or verification of employment report to validate employment through the DU validation service.
Yes. The loan must close within the date outlined in the DU message (ten calendar days from the date that the report is obtained). In most cases, the loan officer will need to order more than one verification of employment (VOE) report and re-run DU in order to ensure employment verification doesn’t expire by the actual closing date.
You can only receive freedom from reps and warrants for employment validated by the DU validation service.
DU issues messages based on the results of DU’s validation process.
DU will not validate employment unless the employer name entered into DU matches the employer name listed on the vendor’s report. If the employer name is reflected differently on the verification report than on the application, (for example: “Federal National Mortgage Association” vs. “Fannie Mae”) the loan officer can change the employer name entered into DU to match what is listed on the vendor report and run DU. If the employer name in DU does not match the employer name on the vendor report, DU Findings will:
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