Previously DU® used a minimum credit score to determine whether a borrower was eligible for a credit risk assessment, but they are replacing that requirement stating “it does not affect our ability to assess credit risk and ensures that the DU risk recommendation is agnostic of third-party credit scores”.

For over 25 years, DU has used its proprietary credit risk models to evaluate mortgage delinquency risk, which are more comprehensive than a credit score. These models evaluate details of the borrower’s credit history and were the first to include trended credit data and on-time rent payment history as part of DU’s overall risk assessment.

Jason Cook, Eastern Shore Manager with Embrace Home Loans said this about the recent change, “Since automated mortgage underwriting must account for a broad set of factors, such as borrower reserves, debt levels, property characteristics, and planned use for the property—we are hopeful this change to use an updated proprietary risk assessment model will help more buyers receive an “Approve/Eligible” recommendation.”

Fannie Mae detailed what this will mean for investors, lenders and borrowers:

• They anticipate this change will have a negligible impact on the number of loan applications receiving an Approve/Eligible recommendation.

• DU risk recommendations will not change based on the third-party credit scores that lenders may use.

• Loans sold to Fannie Mae must continue to include a third-party credit score per the Selling Guide.