How to Work with Wage Income for Underwriters

The Income Calculation tab is your primary workspace for reviewing and analyzing borrower income. This tab is also visible to Loan Officers and organizes income into Wage, Self Employed, Rental, and Other categories. As you review and manage income details, values from each category automatically roll up into the Baseline, Potential, and Adjusted income totals displayed at the top of the screen.

• Baseline: Most conservative income figures calculated by using the exact documented values that align with guideline requirements and no conditioning.

• Potential: Calculated income value that includes income opportunities which, with proper documentation, could be used to increase the borrower’s qualifying income.

• Adjusted: Calculated value of income that reflects modifications or adjustments made by you during review. When a loan is initially reviewed, the Adjusted amount should mirror the Baseline value, unless Fannie Mae has immediate overrides.

Tip: Here are some examples that could increase the values presented in the Potential income column.
1) a paystub showing a significantly higher rate of pay than the W-2;
2) commission indicated on the Paystub, but there is no two-year verification of income present in the file;
3) short term notes payable on a 1065 partnership.

Income Analysis quickly delivers investor Rep & Warrant (R&W) results for Wage income from Fannie Mae®. R&W results are indicated by the presence of an Investor Surround located in the Wage income section of the Income Calculation or LO View tabs. Each Surround is color coded, clickable and contains detailed feedback about the Wage income evaluated by Fannie Mae.

1. From the Income Calculation or LO View tabs, navigate to the Wage section.

2. Observe the FNMA Surround.

   

• Green indicates that Fannie Mae has confirmed the Wage income for R&W relief. In this scenario the income figures are locked to prevent further edits.

• Yellow indicates that additional information is required before Fannie Mae can evaluate the income. The Surround displays an exclamation point as an additional indicator.

• Red indicates that Fannie Mae has confirmed the Wage income is eligible for R&W relief, but the Fannie Mae calculations have been unaccepted by a user so the income can be manually underwritten using alternate calculations.

• Grey indicates that the Wage income has been reviewed by Fannie Mae and is not eligible for R&W relief.

1. To access the Fannie Mae investor popup, click the FNMA Surround.

• DU Casefile ID: Enter the DU Casefile ID in this field then click Resend. The DU Casefile ID is required to obtain R&W relief.

• Fannie Mae Income Items: This summary displays Fannie Mae’s calculated values for base and other variable pay amounts. The summary includes document icons that allow you to view and print the associated documents.

• Application Date: Use this field to enter the date the application was received for document age evaluation.

• Employment Start Date 1003/LOS: Use this field to enter the borrower’s Employment Start Date for evaluation of work history.

• Supplemental Information: Fannie Mae may require additional Information to complete or improve Wage income calculations. This section is available as an expandable accordion within the investor popup.

• Check Date: Use this dropdown menu to switch between the paystubs included in the analysis.

• Accept/Unaccept/Preview/Exit Preview: Use these buttons to accept or unaccept Fannie Mae’s Rep & Warrant (R&W) relief results. When a DU Casefile ID is included in the loan file, the buttons display Accept or Unaccept. If no DU Casefile ID is present, the buttons display Preview or Exit Preview.

• Messages: Displays Fannie Mae findings and income evaluation messages for your review.

• Comment: Use this field to add comments to the loan file for future reference.

• Close: Use this button to exit the investor popup, without saving changes.

• Save Changes: This button will save changes made to the loan file and trigger an action to resubmit your updates to the investor.

Tip: For detailed guidance on Fannie Mae Rep & Warrant relief for Wage income, see How to Manage Fannie Mae® Rep & Warrant for Wage Income.

Before you begin you are not required to accept Fannie Mae Wage income calculations. When Fannie Mae Wage results are accepted, the Wage income fields and calculations are locked, and the Edit option is unavailable. To modify the income information or perform manual underwriting, click Unaccept (or Exit Preview for files without a DU Casefile ID) to remove Fannie Mae's values and unlock the fields.

1. From the Wage section, click the FNMA Surround to access the investor popup.

2. In the Investor popup, click Unaccept. If the order does not have a DU Casefile ID, click Exit Preview instead.

   Note: After you click Unaccept, the popup closes automatically and the Wage fields become available for editing.

3. Return to the Wage income line you want to update and click Edit.

4. Make the necessary changes in the Editing popup.

5. Enter any relevant comments in the Comment field.

6. Click Save Changes.

7. After completing your updates, click Resend to Fannie Mae.

8. Review the information in the Send Income to Fannie Mae popup, then click Send.

   Tip: For Encompass®-integrated users once you complete this you can click Update LOS to send the updated calculations to your Loan Origination System (LOS).

Want to revert back to the approved Fannie Mae R&W calculations for wage?

You can revert back to Fannie Mae's approved calculations at any time by clicking FNMA Surround. In the Investor popup, click Accept if the file includes a DU Casefile ID, or Preview if a DU Casefile ID has not been added.