Selling Guide

Published April 07, 2021

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What are the updated DU requirements for second home and investment property loans?

Eligibility

All second home and investment property loans must meet the following requirements to be eligible for purchase:

  • be underwritten with Desktop Underwriter (DU),
  • receive an Approve/Eligible recommendation, and
  • be delivered as a DU loan in Loan Delivery
    • Automated Underwriting System Type = Desktop Underwriter
    • Automated Underwriting Case Identifier must include the DU casefile ID
    • Automated Underwriting Recommendation Description = Approve Eligible

The above policies apply to all lenders and include loans delivered under negotiated terms (such as variances or special requirements). The only exception that will be permitted for second home and investment properties loans is for high LTV refinance loans that are manually underwritten in accordance with the Alternative Qualification Path and delivered with Special Feature Code 840.

 

Loan delivery and effective dates

These policies are effective for whole loans submitted to our Loan Delivery system on or after Apr. 1, 2021, and for loans delivered into MBS pools with issue dates on or after Apr. 1, 2021. After this date Loan Delivery will apply a “Fatal” error for loans that do not meet the above requirements. Due to our need to comply with these restrictions in the Treasury agreement, we will be monitoring deliveries of second home and investor loans on a lender-level basis, and will be working with lenders that have excessive delivery volume of these types of loans.

 

For additional information, see Lender Letter LL-2021-08, Second Home and Investment Properties Eligibility.

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