Why was refinance of an existing loan with an LTV up to 125 percent initially only allowed with manual underwriting, and not DU (Announcement 09-23)?
Subsequent to the issuance of Announcement 09-23 on July 1, 2009, Fannie Mae conducted analysis and sought customer feedback regarding the potential use of DU Refi Plus to support LTVs up to 125 percent, whether with the existing or a different servicer. Based on feedback received and the analysis conducted, in September 2009 we enabled DU Refi Plus to support LTVs up to 125 percent. The DU risk assessment was updated to reflect the incremental default risk associated with LTV ratios greater than 105 percent. Lenders are reminded that for different-servicer refinances of loans that require MI coverage, getting the existing MI certificate modified or obtaining a new MI certificate for loans with LTVs over 105 percent up to 125 percent may not be possible under current MI guidelines or state law. Please check with your MI provider for details.
