With the release next month of Desktop Underwriter 5.0, Fannie Mae will provide lenders with application-specific details that explain the system's underwriting decision.
Lenders can then share that information with borrowers.
If a loan does not receive an approval recommendation, for example, the lender will receive a detailed explanation of why it was referred to a human underwriter for further review. And if the reason was credit-related, the system will offer specific messages on the information in the borrower's credit report that affected the recommendation. A federally chartered financial institution, Fannie Mae does not make loans directly to consumers. Rather, it buys mortgages from local lenders and packages them into securities for sale to investors world-wide. And since lenders depend on the company to replenish their money supplies, they tend to follow Fannie Mae's rules.