CoreLogic Credco, a provider of merged credit reporting solutions, has introduced the LQ GAP report as the newest addition to the company's suite of Fannie Mae Loan Quality Initiative (LQI) solutions. Designed to help lenders satisfy requirements under the new Fannie Mae LQI, the LQ GAP report provides an automated variance or ‘gap’ reporting solution that identifies and summarizes any changes in a borrower's credit report between pre-approval and pre-funding.
Powered by Credco's proprietary nd Merge technology, the LQ GAP report collects, organizes and compares any changes in tradelines, inquiries, balances, alerts and other credit profile factors that could surface between the initial pre-qualifying credit report and pre-funding.
CoreLogic Credco's LQI-focused solutions, which include ENCORE LQ, Instant Merge LQ and ProScan SSN, are designed to improve a lender's ability to deliver mortgage loans that meet Fannie Mae's underwriting and eligibility guidelines.
Fannie Mae recently updated its LQI guidelines to include debt-to-income (DTI) language that says that if the applicant's debt increases by 3% or more, or exceeds 45% DTI, then the lender will need to re-underwrite the loan. Freddie Mac also recently updated its guidelines with an existing requirement stating that all borrower debts incurred through the ‘note date’ must be included in the debt payment-to-income ratio when submitted.
"Up to 19 percent of all applicants incur additional debt between the pre-approval credit report and pre-funding, ranging from new revolving debt and auto loans to additional new mortgages,’ says John Bauer, executive vice president of business development for CoreLogic Credco. "LQ GAP plays a critical role in monitoring debt-to-income ratios as well as debt increases through new accounts."
SOURCE: CoreLogic Credco