(Update) LO Toolkit Support for 3+ Borrowers

Update 4/11/2025: One of the new features included as part of the 3+ borrowers LO Toolkit workflow updates is the ability to indicate sharing of assets, REOs, and liabilities for all borrower pairs in Blend, including non-joint borrowers. For the Encompass LOS integration however, importing loan data with shared assets, REOs, or liabilities between non-joint borrowers is not supported, and as a result loan data did not map correctly after export. To address this, Blend has added a configuration that removes the ability to indicate shared assets, REOs, and liabilities between non-sharing borrowers in Blend. This configuration has been enabled by default in all customer environments with Encompass as the integrated LOS. With the addition of this configuration, customers may now enable the 3+ Borrowers feature in their environments. Please note, for Encompass customers using the automated credit re-issue functionality, the automatic re-issue of 3+ borrower loans with multiple non-joint credit pulls is not possible at this time, but the credit reference numbers for all credit pulls will be present on the loan in Encompass.

Date Available: Beta 4/15, Prod 5/13

Required?: Yes, this is a required release. Required releases are features that Blend wants to standardize in the codebase, and typically do not require additional configuration. 

How to turn on: This feature will be automatically enabled on the dates listed above.

Purpose of Update and Benefit:
While a user has always been able to add any number of borrowers to the loan application, they were previously blocked from any of the LO toolkit features when adding more than 2 borrowers.

This release now allows our customers to have LO toolkit available for 3 or more borrowers. Please keep in mind that this only impacts the lender application. No changes have been made to the borrower application, so borrowers will still need to reach out to the lender if they have 3 or more applicants.

Please note, for Encompass customers using the automated credit re-issue functionality, the automatic re-issue of 3+ borrower loans with multiple non-joint credit pulls is not possible at this time, but the credit reference numbers for all credit pulls will be present on the loan in Encompass.

Current Behavior:

Blend’s lender application supports the ability to add > 2 borrowers to a loan, but it is not possible to use LO Toolkit features for loans with more than 2 borrowers. 

New Behavior:

Loan team members can use several LO Toolkit features for loans with 3+ borrowers. 

Run credit - Users can now run credit on any number of borrowers. We are still keeping the existing pairs structure, so all borrowers will need to be added as part of a pair or in their own pair.

For example, if there are 4 borrowers on the loan, there can be any combination of 4 single borrowers with a maximum of two pairs. The borrowers will be listed accordingly in the credit UI, and users will need to select which borrowers to pull credit for. Paired borrowers can only be pulled jointly, and non-paired borrowers can only be pulled separately (this is the same as current behavior).

Please note, for Encompass customers using the automated credit re-issue functionality, the automatic re-issue of 3+ borrower loans with multiple non-joint credit pulls is not possible at this time, but the credit reference numbers for all credit pulls will be present on the loan in Encompass.

Run AUS - Users can now run both DU and LPA on more than 2 borrowers. We worked with Fannie and Freddie on the required test cases and both GSEs have approved the testing. Please note that DU allows up to a maximum of 4 borrowers and LPA allows up to 5. If a user adds more than those limits, DU and LPA will be disabled. All other LOTK features are not impacted by this maximum. 

Pricing - Also now available for 3+ borrowers. Pricing isn't impacted by the number of borrowers, but previously this feature was not available with 3 or more borrowers.

Liabilities - Along with the ability to pull credit, all borrowers' liabilities will show up in the monthly debt table. An additional feature we've included in liabilities is automatically omitting duplicate liabilities. 

For example, if two married borrowers are added separately in their own pairs and they have joint liabilities, those liabilities typically show up twice. To avoid double counting, we omit those duplicate liabilities in the monthly debt page, however, users can still manually un-omit them. Additionally, users can manually add liabilities and mark them as jointly owned among any number of borrowers.

Other loan structuring sidebar features (fees, DTI, LTV) - The full loan structuring sidebar will now be available with 3+ borrowers. We are including all appropriate income and debt into the DTI calculation.

Joint ownership of REOs - This was released everywhere in June. With this previous release, users had the ability to select multiple borrowers to jointly own an REO, including borrowers not in the same pair. This is required for 3+ borrowers, and we have not done any testing without this feature. Please see the release notes from June 14th for more information on this.

Joint ownership of assets - This was also separately released in June. With this feature, users have the ability to select multiple borrowers to jointly own an asset, including borrowers not in the same pair. This is required for 3+ borrowers, and we have not done any testing without this feature. Please see the release notes from June 28th for more information on this.

Ability to limit the number of borrowers allowed on the application (optional) - Customers may limit the max number of borrowers, the default maximum number is 12. 

For example, if a lender only allows a maximum of 4 borrowers, then we can set the max to 4. A user can still add more than 4 borrowers, but LOTK will become disabled. This mimics the behavior existing today where users can add any number of borrowers but LOTK is disabled after 3 borrowers are added. This is on top of the AUS borrower limits, so a lender may limit LOTK usage for a max number of borrowers, regardless of the DU and LPA limits. 

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