As previously announced on September 4, 2020, Fannie Mae’s Desktop Underwriter (DU) was erroneously issuing an Out of Scope for the Conventional No MI (Risk Share) program. Fannie Mae recently updated DU so users should no longer receive an Out of Scope message, instead, it will be Approve/Ineligible. There are two acceptable ineligibility reasons: HFA Preferred Risk Share loans are no longer eligible and qualifying income exceeds Fannie Mae’s 80% AMI limits. It is acceptable to proceed using the Conventional No MI program as long as these are the only reasons for ineligibility.
As a reminder manual underwrites for the Conventional No MI program are not allowed.