Imagine your loan is an apple, on a conveyor belt, along with tons of other apples. And there’s a sorter who’s paid to pull out the bad ones — the wormy apples, the bruised ones, the ones that won’t sell. The good apples — the ones that are standard size, color, shape — they get packed up to be sold.
But your loan’s not an apple — it’s the compilation of your income, assets, credit, and the property’s appraisal. During the normal processing of your loan application, your loan will probably get submitted to an AUS (automated underwriting system). There are two systems: one is Fannie Mae’s DU (Desktop Underwriter — sometimes called Desktop Originator) and the other one is Freddie Mac’s LP (Loan Prospector). For convenience, let’s refer to them as DU. DU “looks” at your loan and figures out if it’s salable, just like the sorter did with the apples. And when DU looks at your file, it’s programmed with all the latest Fannie Mae underwriting guidelines to know what constitutes a salable loan. So if DU thinks your loan is salable, it will go through; if it isn’t salable, it won’t go through.
What are some common reasons your loan might not go through? The most prevalent one is debt-to-income ratios. Fannie Mae has built into DU certain acceptable ratios, and if your loan application exceeds those ratios, your loan will not go through DU.
What do you do now? You can ask your underwriter or loan officer to explain why the loan isn’t going through and ask if there is anything you can do to help your loan qualify (such as paying down debt; lowering your loan amount; taking a fixed vs and ARM; getting a co-signor). Or you can see if you’d be approved at a lower loan amount. DU will often approve higher ratios at lower LTVs.
Or you can ask if they could run your loan through LP or portfolio programs.
To find out if your loan will go through DU, call Amerifund at (888) 650-7316 or fill out this form and someone will contact you.