HUD FHA Automated Findings On Automated Underwriting System (AUS)
This ARTICLE On HUD FHA Automated Findings On Automated Underwriting System (AUS) Was PUBLISHED On August 9th, 2020
The Automated Underwriting System (Often referred to AUS) is an intricate sophisticated computer system.
- Loan Officers enter borrower’s data to the Automated Underwriting System
- Within seconds, the AUS will analyze the borrowers’ credit report, credit scores, employment history, credit payment history, public records, asset/income data and render HUD FHA Automated Findings
The Automated Underwriting System has specific algorithms in rendering the following HUD FHA Automated Findings:
- Approve/Eligible which means an automated approval
- Refer/Eligible which means the AUS cannot render a HUD FHA Automated Findings Approval but the file can be downgraded to a manual underwrite
- Refer/With Caution which means the borrower does not meet HUD FHA Mortgage Guidelines per HUD 4000.1 FHA Handbook
In this article, we will cover and discuss FHA Automated Findings On Automated Underwriting System (AUS).
Agency Mortgage Guidelines Versus Lender Overlays
Gustan Cho Associates is different than other lenders due to its no lender overlays policy on government and conventional loans.
- We do not have any lender overlays on FHA, VA, USDA, Conventional Loans
- We just go off the automated findings of the Automated Underwriting System (AUS)
- If borrowers get an approve/eligible per AUS and can meet all the conditions of the AUS, the borrower can rest assured that we will not just close the loan but will close it on time
- Very rarely do we have delays on any borrower’s home loans
- All lenders need to have their borrowers meet the minimum agency mortgage guidelines which are determined by the AUS
- Lenders can have additional guidelines that are above and beyond of the AUS which are called lender overlays
- Example of lender overlays includes higher credit scores, lower debt to income ratio, outstanding collections being paid off, manual underwriting, and other higher-income/credit standards
Gustan Cho Associates Mortgage Group has no lender overlays on government and conforming loans.
How The Automated Underwriting System Works
The loan officer will submit all pertinent data of the borrower in the automated underwriting system.
- The AUS will analyze and render its decision within a matter of seconds
- As long as the borrower meets all agency guidelines, the AUS will render an approve/eligible per AUS
- Lenders with no overlays will only go by the AUS Findings
- However, most lenders have lender overlays which means that lender has additional lending guidelines besides of the minimum agency guidelines rendered with AUS Approval
Borrowers with prior bad credit, lower credit scores, and outstanding collections should seek the consultation of a direct lender with no overlays like Gustan Cho Associates Mortgage Group.
HUD Guidelines Versus Typical Common Lender Overlays
In this paragraph, we will go over the minimum HUD Lending Mortgage Guidelines versus common lender overlays imposed by many lenders:
HUD requires a 580 credit score to qualify for a 3.5% down payment home purchase FHA Loan:
- Most Lenders require a 620 to 640 credit score as part of their lender overlays
HUD allows borrowers under 580 credit scores and down to 500 FICO with 10% down payment:
- Most lenders will not touch any borrowers under 580 FICO
HUD does not require borrowers to pay off outstanding collections and charged-off accounts:
- Most lenders will require outstanding collections and/or charged-off account in order for borrowers to qualify for FHA Loans
HUD does allow late payments in the past 12 months by borrowers if they can get an approve/eligible per AUS
- Many lenders will not allow late payments in the past 24 months even with an approve/eligible per AUS
HUD allows manual underwriting on FHA Loans
- Many lenders will not accept manual underwriting
Borrowers can qualify for FHA Loans during Chapter 13 Bankruptcy Repayment Plan with Trustee Approval after the consumer makes 12 timely payments to the courts via manual underwriting:
- Most lenders will not accept any borrowers who are in a current active Chapter 13 Bankruptcy Repayment plan
There is no waiting period after Chapter 13 Bankruptcy discharged date to qualify for FHA Loans:
- Most lenders will require a two-year waiting period after Chapter 13 Bankruptcy discharged date as part of their lender overlays
For more information about the content in this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected]