Fannie Mae has updated its Selling Guide to reflect new requirements concerning the rounding rules that determine the loan-to-value ratio (LTV). The new policy will require the result of the LTV calculation to be truncated to two decimal places, and then rounded up to the next whole percent.
For example, 96.01% will be delivered as 97%, and 80.001% will be delivered as 80%, Fannie explains in Announcement SEL-2010-01, dated March 2.
The rounding rules also apply to the combined LTV and home equity combined LTV ratios. Until this methodology is implemented in a new version of Fannie Mae's Desktop Underwriter (DU) later this year, DU's rounding methodology may result in a higher LTV for a small number of loan case files.
Lenders' systems must contain rounding methodology that results in the same or a higher LTV, Fannie says.
SOURCE: Fannie Mae