“After assessing the profile of loans delivered to us since the DU 10.1 changes went into effect, we are fine-tuning DU’s risk assessment to limit risk layering.”
This is a direct quote from Fannie Mae as they set to implement their new Desktop Underwriter updates over St. Patrick’s Day weekend. We all remember last year when Fannie Mae adjusted DU 10.1 to allow for mortgages with DTIs up to 50%... well, it just so happens that the industry took full advantage of that (give a mouse a cookie, right?) and Fannie saw a 20% increase in mortgages with DTIs higher than 45%. Let’s be honest… what did they expect? Of course, we took full advantage of that! We were now able to expand our credit box and provide financing to borrowers who previously would have been denied. It makes you think... why did FNMA adjust it in the first place? Was it to help borrowers or was it to help a balance sheet? Yea… I said it. I mean it’s not the first time our industry was greedy.
In all honesty though, I’m glad they are going to build in a new layer of risk assessment with DU 10.2 and after reviewing the one-pager I didn’t see anything that was jumping out to me as big concern. There will be no changes made to the actual risk factors that are evaluated by DU, but there are some tweaks. The Condo Project Review is going to change. The message will now indicate that, based on the Owner of Existing Mortgage field on the online loan application, the existing loan is Fannie Mae-owned and that the project eligibility review is waived if the lender can confirm that the project has the required project-related property and flood insurance coverage, and the project is not a condo hotel or motel, houseboat project, or timeshare or segmented ownership project (that’s directly from their one pager… not me). We’ll have to see what specifically is going to change once we run that first loan with some hair on it through DU, but until then… it looks like the changes aren’t too crazy. 😊
The NCAA’s March Madness tournament is upon us, as the round of 32 kicked off yesterday afternoon. I’m sure production across all industries declined as employees called in sick, scheduled surgeries, watched from their office computer… or took an extended lunch. What is it about this tournament that makes everyone forget about what the NCAA has done to it’s STUDENT athletes… in case you didn’t see… I bolded the STUDENT 9 words ago. Here is a fun stat the cost of player labor (I mean what else is it?) in the NCAA is approximately about $44.2 million per year (assuming a scholarship is worth $50K). This year the tournament is set to bring in around $860 million on the media rights alone… that’s not including ticket, apparel or any other sales. Where do you think that money is going… to the players? I don’t think so. It’s no wonder players are on the first plane out of college and into the NBA. Their talent is used to line the pockets of a historically corrupt association with historically corrupt leaders.
There is an excellent article on SBNATION that goes into more detail about the FBI investigation and the “underground economy” the NCAA has developed… check it out.
Phew… that was heavy, but yea… my bracket is in okay shape. I mean isn’t everyone a hypocrite in some way? Almost like Fannie Mae thinking our industry wouldn’t take advantage of DTIs up to 50%... see what I did there? Full circle.
Have a happy St. Patrick’s Day and I’ll talk to you soon!
MJ
Photo by Ben Hershey on Unsplash
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.