No worries -- here's a primer on what a DU is, courtesy of Scott Groves at Prospect Mortgage:
DU - short for desktop underwriting - is the computer software provided to lenders from Fannie Mae and Freddie Mac. With many offers and pre-approval letters, lenders are being asked to provide "DU" findings. Running "DU" simply means that a lender has run their loan application through a computer system that spits out an answer of either approve or decline. A few things to keep in mind about DU:
Garbage in, Garbage out. DU has no way of verifying the underlying documentation that created the information on the app... that's why we still have human underwriters. Like all computer programs, the results are only as accurate as the data which is input. The accuracy the DU findings (approve, eligible, ineligible, refer, decline, ect) are only as good as the loan officer who is inputing the data.
There are a half dozen different answers that can come back from DU. The only one that an underwriter wants to see is "Approve/Eligible."
DU is a powerful tool for borderline situations. It can help to identify obscure guidelines like cash reserves required for specific transactions and minimum credit scores for non-occupant co-borrowers. However, even with DU, there is no substitute for a seasoned loan officer.
So next time you get asked for a DU, don't sweat it - just reach out to your loan officer. :)
Caroline Choi Real Estate
Caroline Sells The City LA