As you are all aware, DU release 8.0 is rolling out this week.
This means that if your loan was approved through the AUS (Automated Underwriting System) with a 47%-56% debt ratio and has not closed or let's suppose waiting for a Short Sale approval, you risk that the loan will not be approved.
The new AUS guidelines are now restricting the buyer to a maximum of 45%. It is not flexible and does & will not base the decision on the strength of the buyer. The days of stretching the ratios to someone who had compensating factors are over. In my opinion, it will not be long before FHA follows suit (Which always tends to be the case).
So what do you do?
Make your negotiators and the asset managers understand that this will ultimately affect their books if they don't put themselves in gear. Do not be passive and light a candle and make the "Sales Prayer". It's lame, it doesn't help anyone and it surely reduces the chance the deal will get accepted and funded.
I know what you are thinking.. "But Ted, we don't want to upset our negotiator or the asset manager." You might as well say "I,m scaaaarrrredddd!!" and go cry in the corner. Of course not because it would be useless and imagining it, quite funny but embarassing. You have NOTHING TO LOSE!! The deal is going south anyway.
This will cause a ripple in transactions that are pending approval of some sort. Imagine all the deals that are in the waiting line. Wooo Eeeeeyy!! Do not be that transaction. Get on top of this and fast.
There are some banks already implementing these guidelines as of yesterday, so you may want to look into your transactions asap.
If you did not receive your final DU run by a date prior to the last couple of days, then the risk of losing that approval will be exposed. We do not have specific information that confirms that a DU run / approval that was previously run on version 7.0 / 7.1 will be able to run through DU on the older version. To err on the side of caution is the right approach in this case.
There are a lot of other changes that will surely affect your transactions but this post is not about that, it is more of a wake up call. If you are interested in more of the finer details, you can visit Fannie Mae at: https://www.efanniemae.com/sf/guides/duguides/pdf/current/rndodu80.pdf