Selling Guide

Published December 16, 2020

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B3-4.4-01, DU Asset Verification (12/16/2020)

Introduction

This topic contains information on asset verification for loans underwritten with DU, including:


Liquid Assets

DU analyzes the value of liquid assets entered in the loan application in its risk assessment. Assets may be excluded from the loan application if the borrower can qualify without them.

DU considers the following assets liquid assets: Bonds, Bridge Loan Proceeds, Cash-on-Hand (for certain HomeReady loans only), Cash Value of Life Insurance, Certificate of Deposit, Checking, Gift (not deposited), Gift of Equity, Grant (not deposited), Individual Development Account, Money Market, Mutual Fund, Net Equity, Other Liquid Asset, Proceeds from Real Estate Property to be sold on or before closing, Proceeds from Sale of Non-Real Estate Asset, Retirement, Savings, Secured Borrowed Funds, Stocks, Stock Options (vested), and Trust Account.

Note: Some of these asset types may not be available in the lender’s loan origination system.


Non-Liquid Assets

DU does not consider the amount of non-liquid assets. Non-liquid assets do not have to be verified, and will not be identified in a verification message.

DU considers the following assets non-liquid assets: Cash Deposit on Sales, Net Worth of Business, Other Non-Liquid Asset, and Unsecured Borrowed Funds.

Note: Some of these asset types may not be available in the lender’s loan origination system.


Reserve Requirements

For loan casefiles underwritten with DU, DU will determine the reserve requirements based on the overall risk assessment of the loan casefile and the minimum reserves that may be required for the transaction. Reserves may be considered a compensating factor in DU's risk analysis, and may serve to improve the underwriting recommendation.

Refer to the following topics for additional requirements related to minimum reserves:


Asset Values in the DU Underwriting Findings Report

The DU Underwriting Findings report will identify the following values:

  • Total Available Assets: the total of all borrower(s)’ liquid assets entered into DU;

  • Funds Required to Close: includes the cash needed to complete the transaction plus any debts marked paid by closing on purchase or limited cash-out refinance transactions, other than subject property mortgage(s);

  • Reserves Required to be Verified: the amount of reserves that must be verified;

  • Total Funds to be Verified: the sum of Funds Required to Close and Reserves Required to be Verified; and

  • Excess Available Assets, not required to be verified by DU: liquid assets that DU is not requiring the lender to verify.

The Excess Available Assets, not required to be verified by DU (Excess Available Assets) amount represents the amount of assets remaining after subtracting the Total Funds to be Verified from the Total Available Assets. Excess Available Assets do not generally need to be verified.


Non-Occupant Borrower Asset Requirements

Assets that are owned by a non-occupant borrower can be included in the 5% minimum borrower contribution requirement (when applicable), and those funds must be entered in the loan application. Total liquid assets for the occupying borrower and non-occupant borrower are included in DU’s calculation of total available assets.

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