December 7, 2016
CUA 2016-06: Fannie Mae SEL 2016-08 and SEL 2016-09 Freddie Mac Bulletins 2016-19 and 2016-20 United Guaranty’s Professional Program
Fannie Mae Announcement SEL 2016-08 – Selling Guide Updates (Property Inspection Waiver [PIW])
On November 8, United Guaranty issued announcement CUA 2016-04 addressing changes Fannie Mae was making to Desktop Underwriter® (DU®). Within that announcement, United Guaranty stated, “at this time, United Guaranty continues to require a full appraisal on all submissions for mortgage insurance.” We are now amending that position and, effective with the DU 10.0 December 10 update, will allow a Property Inspection Waiver (PIW) when offered by DU and exercised by the lender. Our Credit Union Underwriting Guide (the Guide) will be updated in January 2017 to reflect this change.
By aligning with SEL 2016-08 and the DU Release Notes dated October 24, 2016, United Guaranty requires all submissions for mortgage insurance to meet the requirements outlined by Fannie Mae for the PIW.
All lenders will receive an addendum to their Policy Commitment Letter (PCL) with United Guaranty. The addendum will approve the use of properly issued PIWs pursuant to SEL 2016-08. This will allow lenders to waive the appraisal for United Guaranty and use the property value entered in DU when a PIW is offered by DU and exercised by the lender.
The announcement also addresses relief from certain lender representations and warranties when a PIW is exercised. The Fannie Mae representation and warranty relief does not change the lender’s responsibility for representations to United Guaranty under the terms of its Master Policy.
Effective immediately, United Guaranty's maximim loan amounts will increase as follows:
Fannie Mae Announcement SEL 2016-09 – Selling Guide Updates (DU Validation Services)
On December 6, 2016, Fannie Mae issued SEL 2016-09 addressing DU Validation Services for Assets and Employment for loans underwritten with DU effective December 10, 2016, with its DU 10.0 update.
- AccountChekTM by FormFree will be used to validate asset information from the borrower’s checking accounts, savings accounts, CDs, money market accounts, stocks, mutual funds, and retirement accounts.
- The Work Number® will be used to validate employment information associated with base, bonus, overtime, and commission income.
United Guaranty will allow the DU Validation Services for Assets to document the borrower’s assets in place of the standard documentation (bank statements, VODs, etc.) and the DU Validation Services for Employment to document the borrower’s employment in place of a VVOE. A copy of the reports from AccountChek by FormFree and/or The Work Number must be retained within the loan file and included with all full-file MI applications. No changes to the Guide are required.
The announcement also addresses relief from certain lender representations and warranties when these validation services are used. The Fannie Mae representation and warranty relief does not change the lender’s responsibility for representations to United Guaranty under the terms of its Master Policy.
Freddie Mac Bulletin 2016-19 – Revisions to Income Qualification Requirements
On October 27, 2016, Freddie Mac issued Bulletin 2016-19 announcing changes and clarifications to its income qualification requirements. Freddie Mac is expected to update Loan Product AdvisorSM in February 2017 and will accept delivery on loans with these changes on or after March 6, 2017.
United Guaranty will align with all the changes announced within the bulletin and, effective immediately, will accept mortgage insurance applications with these features.
The Guide will be updated in January 2017 to include the following changes:
- Our Verbal VOE (VVOE) requirement for both CU SwiftClose® (section 2.02 of the Guide) and Standard underwriting requirements (section 3.05.03 of the Guide) will be removed due to our alignment with the Agencies’ VVOE requirements.
- Our requirements addressing employment contracts, confirmation letters, and offer letters within our Standard underwriting requirements (section 3.05.03 of the Guide) will be changed as follows:
- Removing the requirement for a borrower’s employment to start prior to closing. Borrowers who are starting their new employment post-closing will be allowed when meeting the published Freddie Mac post-close employment requirements or when meeting United Guaranty’s Professional Program requirements (section 3.06.03 of the Guide).
- Clarifying when offer letters are allowed to document employment and income.
- Removing our requirement for allowing IRS tax transcripts in place of tax returns, as we are aligning with the Agencies’ requirements.
Freddie Mac Bulletin 2016-20 – Selling Guide Updates
On November 9, 2016, Freddie Mac issued Bulletin 2016-20 addressing underwriting requirements for the following topics. Freddie Mac will accept delivery on loans with these changes on or after March 1, 2017.
United Guaranty will align with all the changes announced within the bulletin and, effective immediately, will accept mortgage insurance applications with these features. No changes to the Guide are required.
- Established new requirements for properties with solar panels.
- Clarified how trended credit data will be used.
- Clarified that all monthly lease payments (not just car lease payments) must be included in the debt-to-income (DTI) ratio.
United Guaranty’s Professional Program
Effective immediately, a rate/term refinance will be an eligible transaction type for United Guaranty’s Professional Program. All other underwriting requirements for the program will remain the same. This change affects our Standard underwriting requirements only. The Guide will be updated in January 2017 to reflect this change.
All items addressed within this announcement apply to loans underwritten using CU SwiftClose or Standard underwriting requirements, unless otherwise noted.
Please contact your United Guaranty Account Representative if you have questions concerning this announcement.
© United Guaranty Corporation 2016. All Rights Reserved. United Guaranty is a marketing term for United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company. United Guaranty and CU SwiftClose are registered marks. Coverage is available through admitted company only. Desktop Underwriter and DU are registered marks of Fannie Mae. Loan Product Advisor is a service mark of Freddie Mac. AccountCheck is a trademark of FORMFREE. The Work Number is a registered mark of Equifax Inc.