Loan Software | Mortgage Document Management
A major change in risk assessment within the mortgage industry occurred in September 2016 when Fannie Mae issued the latest version of its Desktop Underwriter Version 10.0. The reason this has such a large impact is the software now uses borrowers’ trended credit data. Fannie Mae released a statement that they considered the upgrade would cause minimal impact, but many in the industry feel it will cause changes in who gets approved and the reasons behind it.
The historic credit rating system was in effect a snapshot of a borrower’s credit. It showed a history of an account, balances owed on loans and credit cards, and other credit inquiries in the recent past. What it did not show was how the borrower was dealing with his or her debts, which trended data will show. The new system now shows how a borrower is paying off their debt, or if in effect they are not doing so. The trended data should be able to differentiate between borrowers who pay off their credit cards monthly, and those who simply pay the minimums with no attempt to pay down the debt and are a higher risk as a result.
Fannie Mae’s system takes into account a few factors:
- The balance due on each loan or credit account
- The minimum payment required by the lender on each account
- The actual payments made by the borrower
The question remains as time goes on whether trended credit data will make it more difficult for borrowers to re-establish a positive credit rating since the trended data looks back on average 24 months. It may take some time to determine if positive efforts by borrowers to improve their credit rating will be rewarded by lenders.
For companies handling mortgage loans, ATLOS paperless loan processing can greatly reduce your employees’ workload and the costs of handling paper. Our software is secure, robust, and easily adapted to your processing methods. If you are tired of the hassles of handling paper loans, contact ATLOS today and let us streamline your loan system.