Undisclosed Debt Verifications
Don't Let Undisclosed Debt Detour Closing – Minimize Risk and Loan Buybacks
Did you know more than 22% of undisclosed debt is obtained by applicants within 10 days of closing?
Undisclosed debt is the leading cause of mortgage fraud and represents a large portion of lender repurchase demands. Fannie Mae’s Loan Quality Initiative “recommends that lenders have processes in place to facilitate borrower disclosure of changes in financial circumstances throughout the origination process.”
Undisclosed Debt Verifications from Credit Plus provide real-time monitoring into borrower credit activity initiated during the “quiet period” – from the initial credit file pull through loan closing. Activate our undisclosed debt verifications during the mortgage processing stage so there are no surprises at closing.
We were the first in the industry to offer Undisclosed Debt Verifications from all three credit bureaus. That means you get the data you need as well as greater peace of mind that you are in compliance with GSE requirements.
Obtain real-time monitoring of:
- New tradelines
- New inquiries
- New secondary reissues
- New bankruptcies, judgments, liens
- New collections
- New late payments (30-60-90-120 days)
- Payment and balance changes on existing tradelines
Our Undisclosed Debt Verifications Products
Our suite of Undisclosed Debt Verifications products includes the pioneering Undisclosed Debt Monitoring™ powered by Equifax®, as well as reports from Experian® and TransUnion®. Verifications from all three bureaus enable you to move forward, confident that you are minimizing your risk of costly loan buybacks and penalties.
Fannie and Freddie Validate Every Loan
Times have changed. The GSEs used to review only a sampling of the loans they acquired. Now they’re electronically validating 100 percent of the loans they purchase and performing reviews within 120 days. This means you need to do more than just hope and guess that your applicant doesn’t have undisclosed debt. Credit Plus Undisclosed Debt Verifications from all three credit bureaus deliver peace of mind that you are in compliance with GSE requirements.
What do Fannie and Freddie require?
To meet LQI requirements, lenders must verify that borrowers have not incurred new debt or liability and re-qualify borrowers who have obtained additional credit prior to closing. If debt-to-income ratio changes by 3 percent or more, underwriting must be repeated.
Importantly, the GSEs don’t require that a second credit report be pulled before closing. Fannie clarified this in its August 2010 Selling Guide announcement SEL-2010-11:
“Lenders are not required to obtain a second credit report just before loan closing. Rather, Fannie Mae is reminding lenders to have processes in place to facilitate borrower disclosure of changes in financial circumstances throughout the origination process.”
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