What are the differences between the Upgrade and Inclusive Methods and how do I choose the method that is best for our borrowers?

While both the Upgrade and Inclusive methods use cost averaging to provide a standard fee for all buyers, the best choice is determined by your specific operating procedures.

The Inclusive Method bundles all costs in a simple, single fee. This is the most often selected choice and is typically the most cost-effective for lenders that regularly submit all credit reports through FNMA/FMAC for pricing or an underwriting decision.

The Upgrade Method breaks the fees into two groups and is best suited only for lenders that review the credit report to determine viability before submission to FNMA or FMAC. This provides out-of-pocket cost savings on borrowers that are determined to be non-viable at the start of the loan process. When you move forward with the loan by submitting it to a GSE for underwriting/pricing, an upgrade fee applies.