Fannie Mae Eliminates Minimum Credit Score for DU-Approved Loans
Washington, D.C. – in a notable shift for the mortgage industry, Fannie Mae announced on November 5th updates to its Selling Guide that remove minimum credit score requirements for loans underwritten using its Desktop underwriter (DU) automated system. The change,effective for loan files created on or after November 16th,eliminates the previous 620 minimum credit score for single borrowers,or a 620 average median score for multiple borrowers.
Going forward, DU will assess loan eligibility based on a ”comprehensive analysis of risk factors,” according to Fannie Mae, rather than relying on a fixed credit score threshold.
The updates also broaden the scope of Fannie Mae’s “Day 1 Certainty” coverage. This expansion provides lenders with protection from enforcement of representations and warranties related to certain undisclosed non-mortgage liabilities discovered post-closing, beginning the weekend of November 15th, contingent upon adherence to selling Guide conditions.
Additional changes implemented immediately include expanded acceptance of age-of-credit documentation for single-closing construction-to-permanent loans and the inclusion of loans held in “inter vivos” revocable trusts as eligible for “eMortgage” processing.
