Fannie Mae to Loosen Restrictions on Refinancing with DU Refi Plus™

Along with the federal government's Making Home Affordable program, Fannie Mae has introduced "Desktop Underwriter (DU) Refi Plus™", a new program designed to reignite the mortgage industry by streamlining the refinance process for potentially millions of Americans. Fannie Mae has loosened the rules for homeowners seeking lower monthly payments. The less-stringent criteria includes lower acceptable credit scores, reduced income documentation, as well as waiving the requirement for appraisals in certain scenarios. According to Brian Faith, Managing Director of Communications regarding DU Refi Plus™, "Under DU Refi Plus™, the company will be able to identify an existing Fannie Mae loan and review the performance history. This will allow lenders, regardless of the servicer, to enjoy expanded refinancing business opportunities and streamlined processing..."

More specifically, Fannie Mae allows homeowners to refinance up to 105% of the current value of their home and will accept borrowers with credit scores below their current 580 requirement. The reduced documentation requirement results in borrowers submitting a single, current pay stub, rather than the traditional two.

The objective of DU Refi Plus™ is to benefit borrowers by assisting them to remain in their homes. Lenders are encouraged to reduce a borrower's monthly principal and interest payments, provide a more permanent product (such as refinancing an adjustable-rate mortgage into a fixed-rate mortgage) whenever possible, or both.

This change in standards applies only to loans that Fannie Mae currently owns or guarantees. The new program debuted the weekend of April 4, 2009 in the release of DU 7.1.