Fannie Mae DU recommendation indicating that the submitted casefile does not meet the automated credit-risk standard.
Refer with Caution is a Fannie Mae Desktop Underwriter recommendation indicating that the submitted casefile does not meet Fannie Mae’s credit-risk standard for delivery as a DU loan.
If the data is accurate, the loan is not eligible for sale to Fannie Mae through the DU path. The lender may consider manual underwriting only when the loan product and transaction permit a manually underwritten Fannie Mae mortgage.
Refer with Caution is more serious than a request for one missing document. It means the automated risk assessment is not favorable as the file is currently represented.
It is not the lender’s final denial. The lender first reviews whether income, assets, liabilities, credit, and other casefile data were entered accurately and completely. Correcting an error or adding permitted information may justify a resubmission. If the result remains Refer with Caution, the available next steps depend on program eligibility and lender policy.
The term should not be used for Freddie Mac LPA. LPA’s corresponding non-favorable risk class is Caution, a separate system-specific label with its own rules.
The recommendation can appear during preapproval, formal underwriting, or a later resubmission. The DU Underwriting Findings report provides messages that help the lender understand the result and review data accuracy.
The lender may investigate credit-report errors, undisclosed liabilities, derogatory events, overstated income, insufficient reserves, or a combination of risk factors. It then decides whether to correct and rerun DU, restructure the loan, use an eligible manual path, consider another program, or deny the application.
| Next step | When it may be appropriate |
|---|---|
| verify casefile accuracy | determine whether data or credit information was incomplete or wrong |
| AUS Resubmission | rerun DU after a supported correction or material change |
| restructure the mortgage | change loan amount, debts, down payment, product, or another permitted feature |
| Manual Underwriting | use only if the product and transaction allow a Fannie Mae manual path |
| Loan Denial | lender cannot approve the accurate file under an available program |
A lender submits a borrower’s conventional mortgage to DU and receives Refer with Caution. Review shows that a paid installment debt was entered with an incorrect monthly payment.
The lender obtains support for the correct payment, updates the casefile, and resubmits. If DU returns Approve/Eligible, the file can continue under the revised findings. If Refer with Caution remains, the lender evaluates only the manual or alternative paths actually permitted for that transaction.
Approve/Eligible is DU’s favorable credit-risk and eligibility recommendation. Refer with Caution does not meet the DU credit-risk standard.
Caution is an LPA risk class. The terms sound similar but belong to different systems and should not be treated as one generic label.
An ineligible result identifies a purchase or program eligibility issue. Refer with Caution is a credit-risk recommendation, although a DU output can also be ineligible.
A loan denial is the lender’s adverse decision. Refer with Caution can contribute to that decision but does not itself deny the application.
Manual underwriting is a possible review method, not an automatic right after Refer with Caution.