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Ok so here's the deal. I'm processing a loan with a curious DU issue I've not encountered before. It's like this. Gonna use general figures, not the specific dollar amounts.
Borrower is buying an investment property. DU indicates he needs 7 months of reserves, listed as $20,000. Borrower currently has $133,000 straight liquid assets and an additional $30,000 in a 401K. His cash needed to close is $148,000. Therefore the total amount of money I need to verify as liquid is $148,000 + $20,000 = $168,000. Borrower's total assets are $133,000 + $30,000 = $163,000, meaning borrower needs an additional $5,000 to meet minimum reserve requirements.
Yet when I add $5,001 temporary additional funds (marked as liquid so DU picks up properly) to exceed DU's minimum requirement it will not give me an approve/eligible. It in fact comes back as Refer w/ Caution. I tried running it then with $10,000 additional liquid funds and it still came back Refer w/ Caution, only this time the reserves amount JUMPED to $22,000. I then plugged in the full original reserves amount, $20,000, as additional liquid assets and the reserves total again jumped, this time to $33,000 but DU finally gave me an approve/eligible. Remember, these are all general figures changed for privacy reasons and in that last scenario the total cash to close + reserves = $181,000 and the borrower's total liquid assets = $183,000 (in reality they're different numbers but same circumstances).
Why would this happen? If the borrower's total housing expense did not change then why would the reserves amount being called for go up as I raise liquid assets? Does that even make sense to anyone?
So the $20,000 was an amount I'd seen on an earlier eligible DU ran before I got the loan into my pipeline. Not expecting the amount of reserves to change I proceeded forward with the above scenario. But it's like this.
The borrower actually needed no additional funds to exceed the minimum required in verified assets. The borrower currently has $163,000 in actual available assets already documented, bank account and 401K. The cash to close is still $148,000. But when I ran DU giving no extra assets it came back Refer but STILL indicated at the bottom I exceeded the minimum required amount to be verified with reserves listed on this DU this time as $14,500. After doing some troubleshooting with a helpful Fannie Mae tech the conclusion was reached that there's just too many risk factors which is why it keeps coming back Refer in spite of exceeding minimum required funds. So I started adding money and running DU until I found a magic number and you know what? It doesn't pass the loan until I give the guy $21,000 extra funds. And still each time the funds went up the reserves went up. So even though my original scenario was in fact wrong from the start the mystery still exists.
Why would DU keep bumping up the reserves as I add assets?
Thelopez2, the 401K amount is 60% of the total (per rules for a conventional loan).
Everyone I've told this story to says the same thing: they're baffled. If no other parameters of the loan change then the reserve amount required by DU should be static regardless of the funds available. Same would go for LP. Raising available funds should have no effect.
And yet it just happened to me on a 2nd loan yesterday! Two in a row. I'm absolutely stumped.
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