B3-2-06, Approve/Ineligible Recommendations (02/01/2023)

Loan casefiles may receive an Ineligible recommendation for a variety of reasons, including:

• The loan does not comply with stated product requirements or policies that apply to DU loans in this Guide; or
• The loan complies with stated product requirements or policies, but has a combination of product features or risk factors that place the loan outside of Fannie Mae's current acquisition preferences and constraints for DU loans.

The lender must determine if the reason for the ineligibility creates an additional layering of credit risk that should be considered as the lender makes the underwriting decision.

The following table provides further information about these recommendations.

When a loan casefile receives an Approve/Ineligible recommendation, the lender should:

• Review the DU loan data for accuracy and verify that all income, assets, and liabilities were accurately recorded and fully disclosed by the borrower.
• Determine if there is any information outside of the data submitted to DU that could have affected DU's recommendation. In some cases, updating information may resolve the issue that resulted in the ineligibility.
  • For example, if the loan is ineligible due to a combination of product features or risk factors that place the loan outside of Fannie Mae's current acquisition preferences and constraints, the borrower may provide documentation of additional income to lower the debt-to-income ratio or provide a larger down payment to lower the LTV ratio.
• Update the loan application data (if applicable) and resubmit the loan casefile to DU for an updated recommendation.

If the loan casefile still receives and Approve/Ineligible recommendation, the lender may manually underwrite the loan in accordance with the requirements in the table above.