Automated Underwriting System DU Approval


Automated Underwriting System

Every mortgage loan application is submitted for an automated approval via the Desktop Underwriter’s Automated Underwriting System.  The Automated Underwriting System is a computer system that will analyze the information stated on the mortgage application and will analyze the mortgage loan applicants credit report and credit score.  The Automated Underwriting System will take income, debt, assets, liabilities, monthly payments, credit, credit history, credit tradelines, prior derogatories including bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale.  Judgments, and tax liens will be taken into account as well.  Within minutes of submitting a mortgage package for DU Automated Underwriting System, the Desktop Underwriter will render a decision as to whether the file has been approved or denied.

Findings From the Automated Underwriting System

The Automated Underwriting System will issue an automated approval with findings.  The Automated Underwriting System will state what the conditions will be .  For example, the Automated Underwriting System Findings will decided whether collections need to be paid off or whether rental verification is needed as well as other conditions the computer system decides.

How Automated Underwriting System Analyzes Findings

The Automated Underwriting System will recognize from the credit report whether the mortgage borrower has passed the required waiting period after a bankrutcy, foreclosure, deed in lieu of foreclosure, or short sale.  The Automated Underwriting System will also decide whether the mortgage loan borrower will need to suppy rental verification or not.   Rental verification can only be proven by cancelled checks for the prior twelve months or by a letter from a registered property management company.  Cash monthly rental payments and private rental receipts cannot be used for rental verification.  If a mortgage borrower has credit scores of over 620 FICO, the chances are that they would not need rental verification.  Credit scores under 620 FICO will most likely require rental verification.

Debt To Income Ratios

The Automated Underwriting System will also decide what the maximum debt to income ratio a mortgage loan borrower will be capped at.  For mortgage loan borrowers with Credit Scores of 620 or higher, the debt to income ratios might be capped at 56.9%.  For those with Credit Scores under 620 FICO, the chances are that the Automated Underwriting System will cap the debt to income ratio at a much lower level such as 43%.

Manual Underwriting

Back to Work Extenuating Circumstances FHA mortgage loans cannot be detected by DU Automated Underwriting System.  It will get denied.  On Back to Work Extenuating Circumstances, underwriting needs to be manual underwrites.  Mortgage lenders that do not do manual underwrites cannot approve Back to Work Extenuating Circumstances FHA mortgage loans.  Back to Work Extenuating FHA mortgage loans is a new extenuating circumstances FHA mortgage loan program where the waiting period gets shortened to a one year waiting period after someone has a foreclosure, deed in lieu of foreclosure, short sale, or bankruptcy.  Strict guidelines apply and the borrower needs to prove that he or she has had been unemployed for at least six months prior to the bankruptcy or foreclosure and/or had a reduction of at least 20% of total household income for a least six months prior to the bankruptcy and/or foreclosure.  Candidates for the Back to Work Extenuating Circumstances FHA mortgage loan program needs to complete a one hour HUD approved housing counseling program and need to prove that they are on their feet and have been paying their monthly credit obligations on time for the past 12 months.

Does Getting An DU Automated Approval Guarantee Mortgage Loan?

Many mortgage lenders will not even look at a mortgage loan application without a DU Automated Approval by the Automated Underwriting System.  A DU Automated Approval does not guarantee a mortgage loan approval by mortgage lenders with overlays.  A large percentage of mortgage lenders have their own internal mortgage overlays.  For example, just because a mortgage loan borrower got an automated approval with a credit score of 580 FICO does not mean that the mortgage lender will accept that mortgage loan borrower.  That particular mortgage lender might have their own internal mortgage underwriting overlays where they will not accept a mortgage loan applicant with a minimum of a 640 FICO score.


The great news is that we are mortgage bankers with ZERO OVERLAYS.  We will go strictly off the DU Findings from the Automated Underwriting System.  As long as you get an automated approval by Fannie Mae’s Automated Underwriting System, your mortgage loan application will get approved as long as the mortgage loan underwriter can verify your income, debts, liabilities, and assets.  If you got denied for a mortgage loan after you had an automated approval by a mortgage lender, please contact me at Gustan Cho Associates 262-716-8151 or email us at or you can always visit us anytime at .  A large portion of my business is closing on mortgage loans that have been denied at other mortgage companies.  I can close most mortgage loans in 3 weeks or less and have 24 mortgage loan approvals from the date I get the borrower’s signed mortgage application and required documents such as tax returns, pay check stubs, 2 months bank statements, and other documents.

Gustan Cho NMLS ID # 873293

Related> Automated Underwriting System

Related> Difference Between Manual and Automated Underwriting

Related> Conditional Approval

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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