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Use of Trended Credit Data among Changes in DU Version 10.0

By Karen Nielsen | September 22, 2016

Use of Trended Credit Data among Changes in DU Version 10.0 Over the past 21 years, Fannie Mae has continually improved technology for lenders to better assess risk and ensure that creditworthy borrowers have access to mortgage credit.

Desktop Underwriter® (DU®) Version 10.0 – set for release the weekend of Sept. 24 – introduces the use of trended credit data in the credit risk assessment.

Trended credit data is historical data on applicant accounts that expands information on several monthly factors over a period of time, including: amount owed (balance), minimum payment due, and actual payment amount made. This data provides a more thorough analysis of an applicant’s credit history and is a powerful predictor of risk.

“Use of trended data in the DU risk assessment allows a smarter, more thorough analysis of the borrower’s credit history and will benefit borrowers who regularly pay off revolving debt,” says Carlos Perez, senior vice president and chief credit officer – single-family at Fannie Mae.

Individuals who use revolving credit conservatively and/or pay off balances regularly will generally be considered a lower risk.

All other things being equal, those whose revolving credit utilization is high and/or who only make the minimum payment due each month will generally be considered higher risk. They suggest the individual may have difficulty repaying current and future debts. 

The DU credit risk assessment will be the first in the mortgage lending industry to widely consider trended data, says Eric Rosenblatt, vice president of credit risk analytics and monitoring at Fannie Mae.

The DU Version 10.0 risk assessment will take into account trended credit data on revolving credit card accounts for the most recent 24 months’ payment history.

Borrowers with No Credit Score

Another big change is that DU Version 10.0 will allow lenders to underwrite through DU certain loan casefiles in which no applicants have a credit score. This previously was a manual underwriting process for lenders. The automated process requires nontraditional credit documentation – including verification of at least two nontraditional credit sources (one of which must be housing-related) for each applicant. The process requires a 12-month payment history for each source of nontraditional credit.

When evaluating the overall credit risk of applicants who lack established credit histories, DU will consider risk factors such as the borrower’s liquid reserves, debt-to-income ratio, and loan-to-value ratio. 

For loan casefiles that include both an applicant with traditional credit (a credit score) and an applicant without traditional credit, DU will no longer require that the applicant with a credit score contribute more than 50 percent of the qualifying income. Also, income used in qualifying for the loan can come from self-employment. 

Simplifying Your Job

DU Version 10.0 also will introduce simplified policies for applicants with multiple financed properties.

“DU Version 10.0 will automate the policies for underwriting borrowers without a traditional credit history, and simplify underwriting of loans to borrowers with multiple financed properties,” says Marianne Sullivan, senior vice president of single-family business capabilities.

“These updates will make it easier for our lenders to serve even more borrowers and support access to mortgage credit for creditworthy borrowers.”

View this presentation for an overview of new features or the release notes for additional details.


Karen Nielsen is a freelance business writer in Dallas.