Automated Underwriting System: AUS

The Automated Underwriting System is a sophisticated computer system that will render a decision on whether a mortgage applicant is approved for a mortgage loan based on the information from the 1003 and credit reports.  The Automated Underwriting System will take into account the mortgage applicant;s income, debt, liabilities, assets, credit scores, and credit history.  Based on the information, the Automated Underwriting System will report its findings and can require conditions like rental verification, reserves, assets, and other mortgage conditions.  Fannie Mae’s version of Automated Underwriting System is known as DU and Freddie Mac’s version is known as LP.  Findings from the Automated Underwriting System are rendered as approve eligible, refer eligible, or refer with caution.

Approve/Eligible Per DU Findings

Approve eligible files get an automated approval.   Refer eligible files are mortgage applications that is eligible for mortgage approval but is not approved due to certain factors such as not enough assets, high debt to income ratios, or other factors that can be corrected for an automated approval.  Refer with caution pretty much means a denial due to certain factors that do not meet Fannie Mae, Freddie Mac, or FHA mortgage lending guidelines such as the borrower not having met the mandatory waiting period after a foreclosure, deed in lieu of foreclosure, short sale, or bankruptcy.  For files that do not meet automated underwriting system guidelines, the files can be manually underwritten.

Manual Underwriting: Needs To Go Through Lender Who Does Manual Underwrites

Not all mortgage lenders can do manual underwriting mortgage applications.  For those that do, there are more restrictions that apply than automated approved mortgage files.  Manual underwriting is done for files that cannot get automated underwriting system automated approvals.  Manual underwriters look for strong compensating factors such as rental verification and lower debt to income ratios.  Manual underwriting maximum debt to income caps are set at 31 front end debt to income ratios and 43% back end debt to income ratios.  For mortgage loan borrowers with no credit scores, a manual underwriting mortgage approval process can get them a mortgage approval by using non traditional credit such as rental verification,  electric bills, water bills, cable bills, internet bills, cellular bills, insurance bills, tuition, and other alternative sources.  The way to prove that is by providing the mortgage underwriter 12 months worth of cancelled checks.

FHA Back To Work Extenuating Circumstances: One Year Waiting Period After Bankruptcy, Foreclosure, Short Sale, Deed In Lieu Of Foreclosure

HUD approved the FHA Back to Work Extenuating Circumstances due to an economic event mortgage program which shortens the waiting period to one year after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.  All Back to Work Extenuating Circumstances due to an economic event mortgage loan applications are done via manual underwriting and the manual underwriting debt to income ratio caps apply.  If you are mortgage loan borrower in Illinois, Florida, California, Wisconsin, or Indiana and have a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale that has been seasoned for at least a year, please contact me at 262-716-8151 or at www.gustancho.com .

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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