DU Validation Service: Using The Service
The Desktop Underwriter® (DU®) validation service uses information provided in third-party verification reports to validate borrowers’ income, employment, and asset data in DU. These resources can help you optimize its use.
You can also review the DU Validation Service Reference Guide. Login is required.
Prepare the borrower
Help borrowers understand and feel comfortable with the data validation process by explaining the DU validation service process and its benefits. Borrower consent and credentials may be required to access their data through a third-party report provider. It’s important to set expectations.
Highlight the benefits of providing access to their income, employment, and asset data as an alternative to providing all documents separately via paper or email — a faster close, reduced paperwork, and a simpler mortgage experience.
Explain the security measures your company and the report provider have in place to protect their data. Let them know they won't have to share their credentials with you — they will enter them in a secure online portal.
Walk them through the process and help them determine which accounts they should provide access to.
- For asset validation, they should provide access to accounts where funds for closing are saved.
- For income validation using an asset report, provide access to accounts where income is deposited.
- For proof of rent payment, provide access to accounts from which rent is paid.
Once the borrower understands the process, confirm their consent to proceed.
Not all borrowers will say yes to digital validation of their assets, income, and employment. If the borrower does not give permission, you can still collect and verify the documentation manually.
Verify assets
If the borrower has any of the following eligible asset types, start by ordering an Asset Verification Report.
Eligible asset types
Checking and savings accounts
Certificates of deposit (CDs)
Money market accounts
Stocks (not stock options)
Mutual funds
Retirement accounts
If your borrower is using different types of asset accounts to qualify for the loan than the types listed below, revert to collecting documents manually.
Using an asset verification report can help you close loans faster and provide a better borrower experience.
That’s why we suggest a workflow that uses an asset verification report first, and ordering additional reports only when needed.
| Asset report | Verification of income/ verification | Tax return transcript | |
| Asset validation |
| ||
| Positive rent payment history consideration |
| ||
| Cashflow assessment |
| ||
| Employment validation |
|
| |
| Wage income validation (base, bonus, overtime, commission) |
|
| |
| Military income and entitlements validation |
| ||
| Sole Proprietorship (Schedule C) income validation |
| ||
| Child support income validation |
| ||
| Alimony income validation |
| ||
| Social Security income validation |
|
| |
| Pension income validation |
|
| |
| Long-term or VA disability income validation |
|
While the process for ordering a report from your preferred report provider may vary, you typically will need to walk through the following steps with your borrower to obtain asset validation with the DU validation service.
Verify income and employment
Choose the report you will be using for income and employment validation. Depending on the type(s) of income your borrower is using, you may need to complete more than one process.
| Asset verification report | Income and Employment Verification Report | Tax transcript | |
| Borrower has any of the following eligible income types: | Borrower has any of the following eligible income types: | Borrower has any of the following eligible income types: | |
Wage-related income types
| Non-wage related income types
| Wage-related income types
| Non-wage related income types
|
| Wage income types are eligible for employment validation. When the employment is supported (and income is able to be calculated), DU will issue a message that employment is validated with a “Close-by Date" reflecting 15 or more calendar days from the report date. | |||
Ineligible income types
Rental income and self-employment from a Partnership, S Corporation, and Corporation are not currently evaluated by the DU validation service. If a borrower’s income type is ineligible for validation, you can still submit the loan to DU — just document the income information per the Selling Guide.
Learn more about verifying income and employment.
Access complex incomes
The loan officer is responsible for entering the appropriate amount of income in DU based on a review of the third-party report and any supplemental information in the loan file. Fannie Mae’s Income Calculator provides a more efficient and accurate way to calculate income while increasing the certainty of the calculation.
Reverify employment with a supplemental asset verification report
For loans that use an asset verification report to validate borrowers’ employment, a supplemental asset verification report may be ordered for pre-closing employment verification, similar to how a lender might use a verification of employment report prior to closing.
The supplemental asset verification report contains a shorter asset transaction history and does not include account balances or deposit amounts. It only shows recent direct deposit activity, which allows a lender to confirm continued direct deposits from an employer without having to reassess other data points.
Submit and review
Check the accuracy and submit casefile to DU
Review the loan application and associated reports for the following:
- Borrower identity. Ensure identifying information on the report matches the loan application.
- Active employment. The borrower should have a status of “actively” employed.
- Age of data. Check the “as of” dates, and ensure they met age of data requirements.
- Employer name match. Confirm the employer name aligns with the information entered in Form 1003.
- Income type and amount. The information on the report should match the information entered in DU.
- “Close-by” date. If the date has passed, order an updated report and re-run DU.
Investigate any information in the verification report that conflicts with or contradicts other information in the file. Obtain additional documentation from the borrower, if necessary, and enter the appropriate information in DU.
Keep timing in mind:
The first DU submission must be made within 30 days of the report date, and the loan must close within 120 days of the report date.
For employment validation, the loan must close within the date outlined in the DU message (10 or more calendar days from the date the report is obtained).
Review the DU Findings report
After assessing the loan application and associated reports, DU generates a DU Findings report.
- Determine validation status.
- Sometimes, a component may not validate due to a typo or data entry error. If this happens, you can choose to reassess the accuracy of the information entered into Form 1003 and run DU again to validate.
- If assets, income, or employment are not validated, proceed with documentation as indicated in the DU Findings report and revert to collecting documents.
- If you don’t receive validation and receive a “calculated lower amount” message, double-check the report, adjust the income amount entered into DU, and adjust/re-run as necessary.
- Discuss any discrepancies identified in the DU Findings report with the borrower. If needed, correct any issues with the Form 1003 mortgage application and resubmit the DU casefile.
- Collect any documentation that was not validated digitally.
For a full list of DU messages you may encounter, check the DU Message File in Fannie Mae Connect™.
Review frequently asked questions
Get answers to common questions and troubleshoot validation issues.
