How To Get Refer To Approve-Eligible Per AUS To Qualify For Mortgage

This Article Is About How To Get Refer To Approve-Eligible Per AUS To Qualify For Mortgage 

How To Get Refer To Approve-Eligible Per AUS To Qualify For Mortgage: There are ways of getting a refer/eligible per automated underwriting system (AUS). Loan officers can play around and keep on trying to get a referred/eligible to an approve/eligible findings from the automated underwriting system. The AUS is an intricate sophisticated highly technical computer system. It is like it has its own brain. Powered with the latest technology in artificial intelligence, the automated underwriting system will come to a decision on a borrower within seconds. The AUS will carefully analyze the borrower’s credit, scores, payment history, derogatory, public records, assets, income, and liabilities within seconds and render its decision. In this article, we will discuss and cover how to get a refer/eligible to an automated approval.

Types Of Mortgage Guidelines

There are two types of mortgage guidelines:

  1. Agency Guidelines (AUS Approval)
  2. Lender Overlays

Gustan Cho Associates Mortgage Group has no overlays on government and conventional loans. GCA Mortgage Group just goes by agency guidelines which are the automated underwriting system findings. Most other lenders need to meet agency guidelines but may have lending requirements of their own. However, lenders with overlays require to meet the minimum agency guidelines. They need to submit mortgage applicants through AUS. After they get their AUS approve/eligible per findings, they need to then need to see if the mortgage applicant meets their own lending requirements which are called mortgage overlays. At Gustan Cho Associates Mortgage Group, we only need to get an approve/eligible per AUS Findings. At Gustan Cho Associates, borrowers do not have to worry about the second step, which is overlays since we do not have any. In this article, we will discuss and cover How To Get Refer To Approve-Eligible Per AUS To Qualify For a Mortgage.

How Automated Underwriting System Works

Every lender needs to submit a mortgage application to either Fannie Mae or Freddie Mac Automated Underwriting System, also referred to as AUS on all loan programs. Whether it is FHA, VA, USDA, Conventional Loans, to proceed with the mortgage process, the Automated Underwriting System needs to render an approve/eligible per AUS Findings. However, there are times where the automated underwriting system will not render an approve/eligible. The automated underwriting system is a sophisticated highly technologically advanced computerized system that will analyze the borrower’s 1003 mortgage applications, the tri-merger credit reports, and all data from the 1003 and loan application. Within seconds the automated underwriting system will render a decision. It will either render an automated underwriting system approval, a referred to manual underwriting, or denial which is called a refer/ineligible per AUS.

Findings From The Automated Underwriting System

Here are the three findings AUS yields three types of findings:

Approve/Eligible:

  • Approve/Eligible per AUS means that the AUS renders an automated approval where if all information entered in 1003, the credit report is correct, the loan has an automated approval

Refer/Eligible:

  • Refer/Eligible per AUS means that the AUS cannot render an automated approval but may qualify for a manual underwrite

Refer/With Caution:

  • The borrower does not qualify with how AUS is reading the 1003 and credit report

What Does Refer-Eligible Per AUS Mean?

What Does Refer-Eligible Per AUS Mean?

Refer-Eligible per AUS Findings means that the Automated Underwriting System cannot render automated approval.

The file needs to be downgraded to manual underwriting. FHA and VA Home Loans allow manual underwriting. VA Manual Underwriting Guidelines are the same as HUD Manual Underwriting Guidelines. Conventional Loans do not. Nothing is wrong with manual underwriting with FHA and VA Home Mortgages. However, before downgrading the file to manual underwriting, loan officers should do everything possible to get the file and approve-eligible per AUS.

Ways On How To Get Refer To Approve-Eligible Per AUS

The Automated Underwriting System (AUS) is an intricate sophisticated state of the art computer system that analyzes all information about borrowers’ income/credit/disclosures and renders an automated decision within seconds after submission. AUS will only read the information that is on the 1003 and borrowers credit report. If credit reports are inaccurate, then AUS will pick up the inaccurate report. Credit Disputes on credit reports are not allowed during the mortgage process. This because credit disputes automatically discount the derogatory tradelines from the credit scoring model of credit bureaus. AUS does not recognize this. So any automated findings with credit disputes are not valid. Same with public records. If borrowers have public records such as bankruptcies and foreclosures that are not reporting on credit reports, AUS will not recognize that and will render an approve/eligible when the borrower is not qualified. All loan officers should not give up and just take a refer/eligible. Loan Officers can run AUS Findings many times. There are ways on how to get refer to approve-eligible per AUS.  We will explain how to get refer to approve-eligible per AUS on this blog. This blog is intended for both borrowers and loan officers.

Gift Funds Is One Way On How To Get Refer To Approve-Eligible Per AUS

Gift funds are allowed, especially on FHA Loans. HUD Guidelines On Gift Funds allow 100% gifted funds for the down payment. However, Automated Underwriting System and lenders do not view gifted funds for down payment favorably. This holds trues especially for borrowers with under 620 credit scores. There are many cases where borrowers with 100% gifted funds will get a refer-eligible per AUS Findings. But if the loan officer changes the gift funds to the borrower’s own funds, the AUS system will render an approve-eligible per AUS. If the loan officer gets a refer-eligible per AUS, one way on how to get refer to approve-eligible per AUS would be removing gift funds and entering own funds.

Larger Down Payment Is Another Solution On How To Get Refer To Approve-Eligible Per AUS

Is a larger advance payment another solution on how to get a referral for approval - AUS eligible

Another way on how to get referred to approve-eligible per AUS is more skin in the game by borrowers.

  • A larger down payment is a great compensating factor
  • If a borrower with a 580 credit score gets a refer-eligible per AUS on an FHA Home Loan with a 3.5% down payment, try putting 5% to 10% down payment
  • The larger the down payment the fewer risk lenders have so AUS will find it more favorable

On refer automated finding, a larger down payment can be a way on how to get refer to approve-eligible per AUS.

Adding Reserves May Be Potential Solution On How To Get Refer To Approve-Eligible Per AUS

Borrowers who get refer automated findings may try adding reserves and see if the loan officer can trigger that refer to approve-eligible per AUS.

  • Many times one months or more in PITI does wonders and is a great solution on how to get refer to approve-eligible per AUS

This holds true for borrowers with under 620 credit scores, higher debt to income ratios, and substantial outstanding collections and charged-off accounts.

Lower Debt To Income Ratios

Borrowers with higher debt to income ratios and lower scores will often get refer-eligible findings on AUS.

  • By lowering debt to income ratios by paying down or off debts or buying down rates with points may be another solution on how to get refer to approve-eligible per AUS
  • Shopping to get the lowest possible homeowners insurance premium will lower debt to income ratios
  • May want to explore the possibility of going with 7/1 ARM versus a 30-year fixed-rate mortgage
  • Adjustable Rate Mortgages have lower mortgage rates than fixed-rate mortgages

There are many tricks on how to get refer to approve-eligible per AUS to cover on this blog. Every situation is different. To qualify and start the pre-approval process with a direct lender with no overlays, please contact us at GCA Mortgage Group at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. Our team of licensed and support staff at Gustan Cho Associates are available 7 days a week, evenings, weekends, and holidays.

10 Comments
  1. Marie Salter

    My husband and I are in a chapter 13 bankruptcy. We are going to have 12 months of payment to the trustee by December 2020. We have never been late on our payments to the trustee. We would like to qualify for a first time home purchase. We are currently living in San Diego, California, but we are looking to relocate to Georgia (near Atlanta). Our FICO scores right now are just above 600. We have about $50,000 in assets (Bank, 401K, IRA, etc. ). We hope you can help us.

  2. Connie Kennedy

    We are first time home buyers. Ive been an Electrician for over 5yrs and started my own Electrical company in 2020. Ive had a hard time finding someone that will give me a loan since I technically switched jobs this year. We both have great credit and less than 20k in debt total. If you think you can help me please reach out soon

  3. William Rees

    Great informative blog by Gustan Cho Associates on Approve Eligible Per Automated Underwriting System means the borrower meet all of the mortgage lending guidelines for the loan program, whether it is an FHA Loan, Conventional Loan, VA Loan, or USDA Loan. Before the COVID-19 pandemic my wife and I were looking to purchase a house with my VA benefits. Since, I was told that the credit requirement is a 640 score but I am currently at 586. So I am now in the process of trying to find a lender that will work with an individual with a fair credit score.

  4. Sang Mee Yang

    Detached condo. New construction. Closing date 3/4/2021.
    Just found a collection account on my credit report which is not mine. It dropped my score from 757 to 659 in 1 day. Submitted a dispute to Equifax. Received a letter from the company( Southern California Edison) stating they linked the collection account incorrectly to my name. In this case, can the dispute I made still stop me from getting a mortgage?

  5. Thank you very much for presenting this data about how to get referred to approve eligible per AUS, it’s known how to get approved but what are the next steps after getting the approval. Wonderful information, thanks a lot for sharing kind of content with us, great post!

  6. Julie Gibson

    Good Morning,

    I have about 7 derogatory remarks on my credit report but over 100 on-time payments and my credit score is up to 630. I am planning to accept a training position for MLO, but am worried when they check my credit, they will terminate me. I am in Florida. Is it possible to have them check credit prior to taking the class?

    1. Gustan Cho, NMLS 873293 says

      Credit scores do not matter. However, if you have collections and charged-off accounts, the examiner may require you either to pay them off or enter into a written payment agreement. If the outstanding balance is high, you may want to consider filing bankruptcy.

  7. Jonathan, Hannah, as per my text, let’s plan on meeting at the office on Friday, April 16th, 2021 in Lombard. Please bring your computers and cell phones so Peter Bieda can set you guys up with logins for Encompass, Credit Plus, Smart Fees, corporate emails, etc. We can talk about marketing to the Korean community in Chicago, California, and other states on Friday. We are bankers on government and conventional loans but also do non-QM loans such as bank statement loans for self-employed borrowers, light doc, and other creative broker mortgage loan programs. If you need rates before Friday, contact Alex Carlucci and/or Finn McCue who are included in this email. I got your text that you need quotes for rates. Our conventional loans and rates are processed and underwritten in-house and the rates are very competitive. Our rate sheet is through Optimal Blue which it will be set up on your computer on Friday. If you need to submit a loan prior to Friday, contact me and we will see what we can do. We are licensed in 18 states and in order to originate in other states besides the states you are licensed in, you need to get licensed. We will work together on your new loans until you get acclimated with Loan Cabin, our products, and our system.

    Finn McCue will train Hannah and yourself on Encompass, Credit Plus, and packaging a loan together. Alex Carlucci is the sales manager. However, everyone will help you in getting set up. Martyna Szettel will order business cards and set up marketing materials.

    To all, Jonathan is a licensed loan officer and has been working for a mortgage broker. His wife, Hannah Kim is a mortgage processor who will be working with Jonathan side by side on all of his loans. Hannah will be Jonathan’s Loan Officer Assistant. Both Hannah and Jonathan are local and live in Glenview, Illinois, and will be at the office to train. Hannah will train to also process loans for Loan Cabin and once she is up to speed will eventually become a full-time processor for GCA as we are adding more and more states and get busier. They both have been using Calyx Point at their previous employer so they need to get to learn and adapt with Encompass. Jonathan has deals in the pipeline so he is asking for a rate sheet. Looking forward to working with both of you and like to welcome you to the team. Please do not hesitate to contact any of us if you have any questions.

    Gustan Cho NMLS 873293
    National Managing Director
    Gustan Cho Associates | Loan Cabin Inc.
    Toll-Free (800) 900-8569
    Direct (262) 716-8151 Text For A Faster Response
    Website: http://www.gustancho,com
    1910 South Highland Avenue Suite 300
    Lombard, Illinois 60148
    Equal Housing Lender NMLS 1657322
    APPLY NOW: https://gcho.mymortgage-online.com/

    1. Gustan Cho, NMLS 873293 says

      Gustan,

      Thank you for the information and the introduction to the senior member at Gustan Cho Associates. Per your suggestion, I’ve added Georgia, Texas, and Indiana to my license yesterday, and I will add more states as we become acclimated with Loan Cabin and the programs that Loan Cabin has to offer. I will get in touch with Alex and Finn next week for the rate sheets.

      My wife and I are excited to join your team, and we look forward to working with each and every one.

      Sincerely,

      Jonathon Kim

  8. Alex Carlucci

    I wanted to follow up on our discussions last week. Your current score is 555. Because of recent derogatory credit, VA manual underwriting is not an option. FHA is the only option, with a 20% down payment. The issue is high cost. One lender would be approachable from a cost standpoint, but they will not allow a gift to be utilized for the downpayment on files with scores under 620. The other lender will require significant discount points. Because of those points, the cost of the loan will exceed the high-cost threshold. At this point, we do not have any viable options.
    Moving forward, I would focus on getting 12 months of clean credit so that a manual VA underwrite would be an option for you. Or let the gift funds from your father “season” for 60 days or more. We wish you the best moving forward.
    Best,

    Alex Carlucci, the mortgage guru of Gustan Cho Associates

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