Desktop Underwriter Job Aids

 

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Entering the Data for an FHA Loan

For ease of reference, we will generally use the term “DU” to refer to Desktop Originator® and Desktop Underwriter® (DO®/DU®).

This document shows you how to create a new FHA loan casefile in DU and explains how to enter the minimum amount of data necessary to receive an underwriting recommendation for an FHA loan.

  1. The Loan List is the first screen you see when you log in to DU. You can use the Loan List to create or import a loan casefile or to present a list of existing loan casefiles you want to see. To create an FHA loan casefile, click the Create Loan button.   

Note:  If your user ID allows access to multiple institutions (branch locations), a screen appears to allow you to select the institution under which you want to create the loan casefile. Select the institution you want to use, then click Continue.

  1. A new Quick 1003 opens. The Quick 1003 is an electronic version of the Uniform Residential Loan Application (Fannie Mae Form 1003).

    The first screen in the Quick 1003 allows you to enter the applicant’s name and Social Security number under Borrower Information. Enter the same information for the co-applicant, if any, under Co-Borrower Information.

    Tip: Fields required for a DU underwriting recommendation are marked with asterisks (*).

  2. Scroll down on the Borrower Information screen to enter present and mailing addresses. If the applicant or co-applicant uses a different mailing address than the present address, enter this information in the Mailing Address section.



    Tip: If the applicant and co-applicant share the same present address or mailing address, you can quickly copy the address to the co-applicant’s side of the screen by clicking the Present Address or Mailing Address check box on the co-applicant’s side of the screen.

Note: When completing this section, keep the following points in mind:

DU supports a maximum of four applicants, in any applicant/co-applicant combination. If there are additional applicants on the loan, you must create a separate loan application within the loan casefile. To add a separate loan application to the loan casefile, click Insert More.  In order to pull a joint credit report for two applicants, both applicants would need to be on the same loan application in DU.

You should enter a two-year residency history for each applicant. If you need to enter previous residency information, click Previous Address Information in the navigation bar on the left side of the Full1003.

Tip: Once you have completed the required fields of the Borrower Information screen, you have sufficient information to save the loan casefile at any point within the loan casefile creation process, by clicking Save and Close. You can re-open the file to continue adding data by clicking Edit Loan in the Loan Information menu.

  1. To continue entering data, you can click Next to continue to the next screen in the Quick 1003, or you can click one of the links in the navigation bar on the left side of the Quick 1003.

Note: At this point, you have sufficient information to order or reissue credit reports for the applicants on the loan.  For details, see Ordering a new credit report or Reissuing a credit report.

Tip: Once you finish entering the Borrower Information, you can move freely to any other section.

  1. The next screen in the Quick 1003 allows you to enter data for the Type of Mortgage and Terms of Loan, and for the Subject Property Address and Purpose of Loan.  At the top of this screen, enter the necessary mortgage data.



    The following information is required for an FHA loan:

    • In the Mortgage Applied For field, select FHA. 

    • In the Loan Amount field, enter the amount of the base mortgage without the upfront mortgage insurance premium (MIP).

    • In the Amortization Type field, select Fixed Rate or ARM.  The other selections are not supported for FHA loans.

  1. Scroll down to the Subject Property Address and Purpose of Loan section and enter the necessary data.  In the Occupancy field, select Primary Residence.  The other selections are not supported for FHA loans.

    To continue, click Next.

  2. If there are gift funds, scroll down to enter that information. The full amount of the gift needs to be entered in this section regardless of whether any or all of it is being used for the down payment. To continue, click Next.

  3. The Employment Information screen appears.  Enter the name of each applicant’s current employer and the number of years and months each applicant has been on the current job.  For each job you enter, you must select Yes or No in the Self Emp field to indicate whether the applicant is self-employed on that job.

Note:  Do not use the Employment Information screen to enter data for a homemaker, full-time student, or retired applicant.  Only active employment information should be entered in this screen.  If you enter any data in the Employer Name field, you will receive a Findings message that asks you to verify the employment. Any income that does not come directly from employment should be entered in the Other Income section of the Monthly Income and Combined Housing Expense Information screen.

If an applicant is currently working at a second job, enter the data for that job in a separate row under Secondary/Previous Employment Information, and select Secondary in the Status field.

Tip:  In some cases, you may also need to enter information about an applicant’s previous employment.  To enter data for a previous job, use a separate row under Secondary/Previous Employment Information, and select Previous in the Status field.

To continue, click Next.

  1. The next section in the Quick 1003 allows you to enter data about the applicant's income and current and proposed housing expenses.

    Enter the necessary data about the applicant's monthly income at the top of the screen.  Here are a few data entry tips:

    • The Base Income field should include income from the applicant’s primary job, along with any income that the applicant receives from second jobs that you entered in the Employment screen.

    • The Other field shows the rolled-up total of the amounts entered in the Other Income section of the screen.  To place an amount in the Other field, you’ll first need to scroll down to Other Income and enter the data there.

Important:  Net rental income should not be entered on this screen.  Instead, the net rental income will be automatically calculated from property data entered in the REO screen.  DU uses the net rental amount from the REO screen when processing government loans.

Note: The following income types are used for conventional loans only and will result in an error if selected: Capital Gains, Employment Related Assets, Foreign Income, Royalty Payment, Seasonal Income, Temporary Leave, Tip Income, Non-Borrower Household Income, Accessory Unit Income and Housing Choice Voucher Program (Section 8).


  1. Scroll down to the Combined Monthly Housing Expense section and enter the necessary data about the applicant’s current and proposed housing expenses, including insurance, taxes and homeowner association dues.  DU calculates the totals for you.

    To continue to the next screen, click Next.


  2. In the Assets screen, enter the applicant’s asset information.

    To continue to the next screen, click Next.


  3. The Real Estate Owned screen appears. For each property, complete the following fields on this screen:

    1. Select the Property Owner.

    2. Select one of the following options in the Property Indicator field:

      • Select Current Residence if the property is the current primary residence, but not the subject property.

      • Select Refi of Current Residence if the property is both the applicant’s current primary residence and the subject property for the transaction.  Select this option for refinance transactions.

      • Select Not Applicable if the property does not meet the above conditions.

        Note: The Subject of the Loan option is generally not applicable for FHA loans.

    1. Select one of the following options in the Property Disposition field for each property listed:

      • Select Sold if the funds from the sale have already been placed in a depository account. 

      • Select Pending Sale if the property will go to closing before the closing of the subject loan, but the funds from the sale have not yet been placed in a depository account. 

        Tip: The result of the pending sale calculation, which is (Market Value x 90%) – Amt of Mtg Liens, can be overridden by entering Net Equity in the Asset section. 

      • Select Rental if the applicant is using the property as a rental property.

        Tip: The result of the net rental income calculation, which is (Gross Rental Income x 75%) – (Mtg Payments + Insur, Maint, Taxes), can be overridden by changing the amount in the Net Rental Income field.

Note: net rental income should not be entered in the Income & Housing section, but the amount in the Net Rental Income field will be displayed in Income & Housing section.

      • Select Retained if the property will still belong to the applicant after closing.  For example, you would select Retained for a refinance or for a second home that is already owned by the applicant.

    1. Select the Type of Property.

    1. Enter the property address, city, state, and ZIP code.

Scroll to the right to enter data in the remaining fields.

  1. Next is the Liabilities screen. The quickest way to use the Liabilities screen is to let DU copy the liabilities for you from the credit report. To do this, you will use the auto-populate liabilities feature in the credit ordering screen. For details, see Ordering a new credit report or Reissuing a credit report.



    For each mortgage liability, use the Related Property field to select the property to which the mortgage applies.

  2. If an applicant has a child support, alimony, separate maintenance, job-related expense or other expense, and the payment is required to be included in the total expense ratio per FHA’s guidelines, you must enter the monthly payment amount in the Additional Expenses section at the bottom of the Liabilities screen. If applicable, you must also answer Yes to Question G in the Declarations screen for the appropriate applicant.

Note:  If you enter a monthly payment amount but you don’t enter a number in the Months Left to Pay field, the payment will always be included in DU’s total expense ratio calculation.

For further information, check with FHA guidelines regarding the exclusion of debt.

To continue to the next screen, click Next.

  1. Enter the necessary data in the Details of Transaction screen.

    To continue to the next screen, click Next.

Note: For a refinance transaction the MIP refund should not be entered as an Other Credit.  The MIP refund amount should be entered on the Government screen.

  1. By default, most of the questions at the top of the Declarations screen are already answered for you.  You need to make sure that these questions are answered accurately. Before you submit the loan for an underwriting recommendation, you must also provide an answer to Question L for all applicants.

  2. Scroll down to the Information for Government Monitoring Purposes section and enter the necessary data.  When appropriate, you can select multiple race categories for each individual applicant.

Note:  For applications taken by telephone, you must ask for this information, but you cannot require the applicant to provide it.  You should inform the applicant that the federal government is requesting this information in order to monitor compliance with federal statutes that prohibit lenders from discriminating against applicants on these bases.

For applications taken in person, you must ask for this information, but you cannot require the applicant to provide it.  If the applicant chooses not to provide the information, to the extent possible, you should note the information on the basis of visual observation or surname.  You should also inform the applicant that if the information is not provided, you are required to note the data on the basis of visual observation or surname.

Although the information in this section is not required to qualify an applicant (or co-applicant) or underwrite a loan, this information is required in connection the Federal Reserve System's Regulation C and
the Home Mortgage Disclosure Act (HMDA).

To continue to the next screen, click Next.

  1. Enter the necessary data in the Additional Data screen.  To submit a loan for an underwriting recommendation, you must always enter the property appraised value and subject property type in this screen.  The other entries on this screen depend on the details of the loan you are submitting.

Note:  When completing this section, keep the following points in mind:

    • If you do not know the appraised value or if the loan is a Streamline Refinance without an appraisal, you must still enter the estimated appraised value.  FHA guidelines require that lenders follow standard FHA procedures to review and determine the actual assigned value.  If the assigned value differs from the estimated value, you will need to change the amount in the Property Appraised Value field and resubmit the loan. 

    • Under Lien Type, make sure First Mortgage is selected.  The other options are not supported for FHA loans. 

    • Under Subject Property Type, the following property types are not supported for FHA loans:

      • Co-operative-

      • MH Select™

    • Under ARM Plan (if ARM was selected as the amortization type), select one of the following:

      • 251 – FHA ARM: 1 YR TREASURY

      • FHA HYBRID ARM 

The other options are not valid for FHA loans.

Click Next to continue to the next screen.

  1. Enter the necessary data in the FHA Government Information screen.  The Section of the Act field is required for all FHA loans submitted for an underwriting recommendation.

Note:  The Agency Case Number field is not required to submit the loan for an underwriting recommendation; however, it is required to obtain FHA insurance.  You must enter a valid FHA case number in this field or leave it blank. If you do not complete the Agency Case Number field, DU displays a warning message.  In this case, click OK.  If you do not complete the Agency Case Number, then the underwriting recommendation and findings could be inaccurate. 

Enter your FHA Lender ID or Sponsored Originator EIN (Employer Identification Number). Entering a number in both fields will result in an error.

Use the Seller Concessions field to enter the dollar amount of seller concessions in excess of the FHA’s limitation, if you have not already reduced the loan amount by the amount of the seller concession.

Enter the necessary CAIVRS numbers for the applicant and co-applicant in the CAIVRS # fields.

  1. Once you have entered the necessary data for an FHA loan, you are ready to submit the loan casefile for an underwriting recommendation. 

    If you have not requested or reissued credit for the loan, you will need to do so at this point.

    Click Submit. For details, see one of the related job aids listed below.

Related Job Aids

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