DU Refi Plus without Mortgage Insurance

What is happening today in mortgage lending:
Fannie announces DU Refi Plus without Mortgage Insurance

Desktop Underwriter was updated last weekend to begin issuing DU Refi Plus findings for eligible Rate/Term Refinance transactions. The Loan Product Description, pricing and systems updates will be available Monday, April 6, 2009. We are not required to be the originator or servicer of the loan being refinanced.

Due to MI Company restrictions as well as operational concerns, the initial release of the DU Refi Plus product will allow only loans that do not require Mortgage Insurance. This includes loans with LTV >80% when there is not MI on the existing loan as well as loans with LTV <80%.>Following is a preview of the DU Refi Plus product:

LTV Matrix
1-4 unit Primary Residence, 2 unit Second Home, and 1-4 unit Investment Property transactions are allowed up to 105% LTV. See the Mortgage Insurance section below for more information.
Credit scores and ratios are determined by DU

Appraisal
Appraisal requirements will be determined by DU
Property Fieldwork Waivers may be allowed per DU findings

Condos
Condo project approvals are not required

Loan Amount
Conforming Generic and Conforming Plus loan amounts are allowed
The new Temporary 2009 loan limits will be available for this product. Details regarding new loan limits will be provided on Monday.
Loan amount may include:
Payoff of the unpaid principal balance of the existing first lien
Payment of closing costs, prepaids and discount points
Cash back to borrower not to exceed 2% of the new loan balance or $2,000

Mortgage Insurance
Refinance of existing loans with Mortgage Insurance is not allowed at this time

Ratios/Qualifying Rate
Ratios are determined by DU
Loans receiving Ineligible DU findings due to excessive expense (DTI) ratio are not allowed

Secondary Financing
New secondary financing is not allowed
Existing second liens must be re-subordinated
o CLTV/(H)CLTV restrictions do not apply

Underwriting/DU
Approve/Eligible or Approve/Ineligible required
Expanded Approvals are not allowed
The following Ineligible findings are allowed until a subsequent DU update scheduled for May 2, 2009:
LTV/CLTV or (H)CLTV exceeds 80%
Minimum representative credit score is not met
Ineligible findings for loan amount are allowed until DU is updated. Loan amount must meet current published limits.
Documentation requirements will be determined by DU with a minimum of:
Salaried: One (1) paystub and a Verbal VOE
Commissioned/Self-Employed: Most recent Federal Tax Return
Payment history for any mortgage debt must be 0 x 60 for 12 months regardless of DU approval

DU Refi Plus without Mortgage Insurance
Only loans currently owned by Fannie Mae are eligible for the DU Refi Plus program:
The Fannie Mae website has a Look Up Table available to aid in determining if a loan is owned by Fannie Mae. A link to the Look Up Table has been added to the Refinance (Rate/Term) section of the Loan Product Description.
Only loans that do not require Mortgage Insurance are eligible for the initial release of DU Refi Plus:
DU will indicate if the loan currently has Mortgage Insurance by issuing the following feedback message:
“The existing Fannie Mae loan being refinanced with this DU Refi Plus transaction contains the following mortgage insurance (MI) information (Provider/Coverage/Cert Number)”
Refer to Mortgage Insurance section of the Loan Product Description for documentation requirements when DU indicates that mortgage insurance does not exist.
Clarification has been added to the Mortgage Insurance section indicating the methods available for determining if the existing loan had Lender Paid Mortgage Insurance.


Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com