Step Up Borrowers and Desktop Underwriter (DU®) Findings
Fannie Mae's DU® update last weekend caused an issue with HFA Preferred™ and HFA Preferred Risk Sharing™ loans for non first-time homebuyers with LTVs above 95%.
Fannie Mae acknowledges DU®’s new requirement that at least one borrower be a first-time homebuyer is being incorrectly applied to HFA Preferred™ and Preferred Risk Sharing™ mortgages, and will result in an "approve/ineligible" message.
Until this edit is fixed in DU®, lenders can ignore the message and deliver the loan if the only reason for the ineligible recommendation is that the LTV is above 95% and at least one of the borrowers is not a first-time homebuyer.
U.S. Bank Home Mortgage HFA Division is aware of this issue and supports Fannie Mae’s suggested work around.