Automated Underwriting System And Manual Underwriting

Fannie Mae’s Automated Underwriting System is also known as DU, Desktop Underwriting.   DU Findings are the result of Fannie Mae’s Automated Underwriting System, which is also known as AUS.  The majority of the mortgage lenders in this country will only accept an approval via Fannie Mae’s Automated Underwriting System with an approve/eligible DU Findings in order for them to proceed with the mortgage underwriting and approval process.

Automated Underwriting Versus Manual Underwriting

Fannie Mae’s Automated Underwriting System is a sophisticated computer system that takes income, assets, debts, liabilities, credit history, credit scores, payment history, job longevity, public records, judgments,  derogatory credit, and re-established credit all into account and computes all of these items and renders a decision on whether to approve or deny a mortgage application.  Fannie Mae’s Automated Underwriting System will also take debt to income ratios into consideration as well as asset and gift information.   AUS will also determine whether the mortgage loan borrower needs verification of rent or not and whether collection accounts or charge offs need to be paid off.  In the event if a mortgage application gets a referred/eligible from Fannie Mae’s Automated Underwriting System, the mortgage application is not completely dead.  There are mortgage lenders that can and will do Manual Underwrites on mortgage loan applications.  Manual Underwriting are mortgage loan applications that needs to be manually underwritten by a mortgage loan underwriter because the mortgage loan application does not qualify for an automated approval via Fannie Mae’s Automated Underwriting System.

Why Manual Underwriting

If Fannie Mae’s Automated Underwriting System picks up the credit report wrong or there is a discrepancy with what the borrower states on his mortgage application and how AUS is reading the mortgage loan borrowers credit reports and the mortgage loan borrower keeps on getting a denial per DU Findings, then Manual Underwriting might be the only way to go.  Unfortunately,  very few mortgage lenders are able to do Manual Underwriting.  Fortunately, I do manual underwriting for mortgage loan borrowers in Illinois, Florida, Wisconsin, Indiana, and California.

All FHA Back to Work Extenuating Circumstances Due To An Economic Event Loans Are Manual Underwriting

HUD recently shortened the waiting period for those mortgage loan borrowers who had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale to a mandatory one year waiting period via the FHA Back to work extenuating circumstances due to an economic event.   The FHA Back to Work Extenuating Circumstances due to an economic event mortgage program are all manually underwriting and in order to qualify for these loans, the mortgage loan borrower needs to have been unemployed or underemployed for at least six months or more prior to the initiation of the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale which has impacted a reduction of at least 20% in the mortgage loan borrower’s household income.  If you are interested in learning more about HUD’s FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program,  please contact me at 262-716-8151 or visit me 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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