Day 1 Certainty - A Breakthrough in the Mortgage Industry
Fannie Mae's new Day 1 Certainty innovation is a major breakthrough that will help many homebuyers in the Louisville Metro area. It is just as exciting for existing homeowners if they want to refinance a mortgage in a hurry.
I am thrilled about this change because it helps many of my clients get approved for a mortgage without a lot of hassle due to massive paperwork.
Borrowers and lenders suffer from outdated paper intensive processes that date back to the dark ages. Gathering and sending support documents such as pay stubs, tax returns and W2s are a genuine pain for every borrower. Obtaining the correct documents and keeping them secure is major problem for very lender.
An recent update to Fannie Mae's Automated Underwriting System allows many borrowers to take advantage of an optional data validation process for income, assets and employment. English - borrowers don't need to furnish income, assets or employment documents to get a mortgage loan.
This platform is nothing like the "No Document" or "Stated Income" loans of the past. In fact, it is just the opposite. Day 1 Certainty allows the lender to verify almost everything electronically. This eliminates the possibility of a borrower's tax return being misplaced or stolen from the lender because they never received a copy. It also streamlines the loan application process by eliminating the need to review every line on every document. There's nothing more boring than reading someone's tax returns.
Day 1 Certainty is currently available to only conventional loan applications when the borrower is not self-employed. To eliminate the need for employment and income documents the borrower's employer must use an outside vendor for verification of employment. Many large and mid-sized companies in Louisville use The Work Number, a service of Equifax for their employment verifications.
A week before we began using Day 1 Certainty a client sent me their support documents, 45 pages. A few weeks later they found a home and instead of updating the support documents we used The Work Number and the report was 2 pages!
Some local employers that use The Work Number include Humana, UPS, Papa Johns, Kindred Health Care, Jewish Hospital, Kroger and Amazon just to name a few. The service is not limited to large employers, there are many small and mid-sized companies on the list.
Not all lenders will offer the optional method due to the expense. The employee/homebuyer doesn't pay for the service, it is a cost to the lender.
Eligible homeowners that want to refinance their existing mortgage may not be required to get an appraisal if the findings allow it, again this is optional. The homeowner could request an appraisal but I have never had a client want to pay for something if it wasn't a requirement.
As I mentioned, this option of alternate verification is currently available for only conforming conventional mortgage loans. But so far, the feedback from Fannie Mae has been very favorable. My hope is other types of mortgages will follow their lead once they see how well it works. If it works well for conventional loans it should work just as well for FHA, VA and RHS.
This is a major leap forward for making financing more accessible for home buyers in our area.
Contact me if you want to find out if your employer is on the list at The Work Number.
And if we are not already connected in LinkedIn I am always happy to receive an invitation to network.
Jim Simms NMLS 6395. Equal Housing Lender. Century Mortgage Company d/b/a Century Lending Company, NMLS 3925. This is not a commitment to lend. Program availability based upon individual circumstances.
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