I received some questions from a user about including/excluding liabilities and REO information for DO/DU purposes. Here are the questions and answers from the email:

Questions:

1)  In the previous versions of Point if you put a payment in ()parentheses it didn't count in the ratios & LP read it that way as well.  I am finding that you must mark the liability "to be paid off" in order for it not to be counted in LP.  Is that what you have found?

2)  Is the real estate owned section acting differently?  I have a rental property & have filled in value, mtg. payment, & taxes & insurance.  I don't want to count the payment & have shown this in the liabilities section, but LP seems to be pulling the payment & tax/insurance amount over & raising my ratios.  I didn't think anything was pulled from the real estate owned section before in recent versions of POINT??

Answers:

1. Parentheses still work to exclude the debt from the ratios in Point but if it is marked with an “M” in the RL(I)M field, it still places the payment into segment 6L of the FNMA file. THIS APPEARS TO BE A CHANGE FROM THE PRIOR VERSIONS. If you mark it as a mortgage from the drop-down, this will fix the problem in FNMA. The alternative is to remove the “M” from the RL(I)M field. This is somewhat inconsistent behavior and probably happened when they updated the application layout or changed the FNMA export procedure. My suggestion is to eliminate all RL(I)M entries and just use the drop-down. With FNMA and FHLMC, these drop-down entries are accurate whereas the “RLIM” entries didn’t support the FNMA EDI codes. In other words, maybe that field should be phased out because it’s not compatible with FNMA. It's probably still there for "legacy" purposes. I do NOT suggest marking the liability "to be paid off". You can use the Omit checkbox to be certain that FNMA doesn't count the liability. This amounts to a bunch of extra work before you submit to AUS.
2. Point has always exported the REO section to segment 06G of the FNMA file. I have done some experimenting with this section and it seems to be writing the segments correctly. When I test the files I have created, I get several errors but they’re just a result of me not filling out a complete application. Just so you know, I have had this problem with prior versions of Point as well. It depends on the website engine you’re using. Some engines translate it correctly and some don’t. If you're submitting directly to FNMA and having a problem, then it warrants further investigation; if not, it's probably a matter of working with your DO provider/wholesaler to figure out how to fix it.

Comments / Suggestions:

• Files originated under the older versions may have the RL(I)M fields automatically set when credit is pulled. Although the debt ratio calculations may still be accurate in Point, sending them to DO/DU may give different results than before. Before submitting, check the Omit box on any debts you want to exclude from the AUS ratios. Don't use parentheses to exclude the debt from ratios (for FNMA purposes), use the Omit box.

• FNMA is very sensitive about the REO and mortgages being properly linked. Go to the Interfaces | Fannie Mae | Addendum and make sure you link the liabilities with the properties.

• If this is a refinance of the borrower's primary residence, the address of the borrower's current residence on the application and the address on the personal residence listing on the REO schedule must match exactly. There is no other mechanism for Point to tell FNMA that the property is the borrower's personal residence. (Position in the REO schedule doesn't matter anymore.)

• Some AUS engines can't deal with missing payments in liability fields. Using parenthesis leaves this segment of the FNMA file blank and can cause errors. This is why checking the Omit box is necessary.

• Just because the ratios are correct in Point doesn't mean they will be correct in the AUS. Be certain to check your findings to make sure the AUS is showing the same ratios you are. Even if you get an acceptable finding, the borrower may be eligible for a better finding with lower required documentation if the ratios are wrong.

If someone knows differently or has more information, please post it here.

- Mike
mike@mtig.biz