Errors On Credit Reports Will Affect Your AUS Automated Approval

Credit Reports

Errors On Credit Reports

One of the most important things you need before your mortgage loan application can be processed and underwritten is to get a DU ( Desktop Underwriter ) automated approval by Fannie Mae’s Automated Underwriting System.  Fannie Mae’s Automated Underwriting System is a sophisticated mortgage, credit, financial analyzer that takes your income, assets, liabilities, as well as your credit reports and credit scores into account and comes up with a decision whether the mortgage loan request you have applied for is approved or denied.  The Automated Underwriting System analyzes your credit report in extreme detail taking your prior collections, account balances, payment history, prior bankruptcy, prior foreclosure, dates of bankruptcy, dates of foreclosure, dates of short sales, judgments, tax liens, repossessions, credit disputes, and any other factors from your credit reports in its decision process.  The DU findings only takes a few minutes from the time the mortgage loan orginator inputs all of your information.  Errors on credit reports will definitely affect your DU Findings.  The Automated Underwriting System reads off whatever that is on your credit reports and will pick errors on credit reports. It is your job to check for errors on your credit reports and tell you mortgage loan orginator so he or she can correct the errors on credit reports prior to submitting it to Fannie Mae’s AUS for the DU Findings.

How Your Mortgage Approval Get Denied Due To Errors On Your Credit Reports

As discussed earlier, the Automated Underwriting System will go by your credit reports and it WILL go by errors on credit reports.  For example, for a mortgage loan borrower to qualify for a conventional loan after a deed in lieu of foreclosure, there is a two year waiting period after the recorded date of the deed in lieu of foreclosure as long as the mortgage loan borrower has a 20% down payment.  However, the verbiage needs to read deed in lieu of foreclosure on the credit report and not foreclosure and the code needs to be a M5 ( deed in lieu of foreclosure ) and not M9 ( which is a regular foreclosure).

Deed In Lieu Being Reported As Regular Foreclosures

On many cases due to errors on credit reports, a mortgage loan borrower who has had a deed in lieu of foreclosure has a regular foreclosure reported on his credit reports which the AUS which will be a denial on the DU Findings.  Until errors on credit reports are corrected and the new credit report reflects the correction, AUS will not pick it up and you will not get an approve eligible on the DU Findings.  On cases like this, your mortgage loan originator can submit the deed in foreclosure paperwork to a third party credit consulting vendor along with the documentation and request a rapid rescore where it will update the corrected information to all three credit reporting agencies within 3 to 5 business days.

Public Records Dates Errors

Other errors on credit reports include the credit reporting agencies reporting a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale the wrong date of the event .  On these types of errors on credit reports, the same correction procedures need to be met as the above.

Always monitor your credit reports for errors on credit reports and dispute the errors as soon as you catch them.  One important note to mention is that credit disputes with open balances are not allowed during the mortgage application process.  If you hire a credit repair company and intend on applying for a mortgage in the near future, tell them to keep away from disputing credit derogatories with open balances unless you intend on paying them off.  If you are going through the mortgage application process currently and are retracting a credit dispute, your credit scores will definitely drop when a pending dispute is retracted.

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Related> Credit Report And Credit Scores

Related> What Do Underwriters Look On Credit Reports

Related> Common Credit Report Errors

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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