What Does Refer Eligible Per Automated Findings Mean?

This ARTICLE Is About Refer Eligible Per Automated Findings

What If You Get A Refer Eligible Per Automated Findings

The Automated Underwriting System is a sophisticated underwriting system that analyzes a mortgage loan application of a borrower within seconds and renders its automated findings.

  • In order for the mortgage process to proceed, the borrower needs to get an approve/eligible per automated underwriting system (AUS)
  • However, in the event, if the borrower gets a refer/eligible per AUS, it means the AUS cannot render an automated approval but the borrower may be eligible for a mortgage via a manual underwrite
  • Manual underwriting is when a human mortgage underwriter carefully underwrites the file
  • FHA and VA loans are the only two mortgage programs that allow manual underwriting
  • Not all lenders do manual underwrites
  • Gustan Cho Associates is a national mortgage company licensed in multiple states with no lender overlays
  • A large percentage of our borrowers at Gustan Cho Associates are manual underwriting files

In this article, we will discuss and cover what refer eligible per automated findings are and how it works.

The Automated Underwriting Systems Lenders Use

Refer Eligible Per Automated Findings

The Automated Underwriting System, also known as AUS render an automated decision after analyzing the following:

  • borrower’s credit scores
  • credit payment history
  • credit tradelines
  • borrower’s delinquent accounts
  • borrower’s public records
  • judgments
  • bankruptcies
  • foreclosures
  • short sales
  • deed in lieu of foreclosure
  • tax liens
  • credit disputes on charge off accounts and non-medical collections
  • outstanding collection accounts
  • borrower’s charge off accounts
  • income
  • assets

Every single line item of borrower stated on the 1003 mortgage loan application.

Declaration Page

Analyzes the declaration page:

  • where it asks whether the borrower has owned a home before
  • had a prior bankruptcy or foreclosure
  • civil judgments against them
  • any pending lawsuits
  • Within minutes or seconds of entering the financial and credit profile to the Automated Underwriting System, the AUS will render a decision

It will come out as Approve/Eligible, Refer/Eligible, or Refer/Caution.

Approve Eligible Per Automated Findings

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.

  • An approve eligible per automated findings means that the Automated Underwriting System has reviewed all of the borrowers’ credit and financial profile
  • It means the AUS finds the borrower is approved via the automated underwriting system on the loan program

The approve eligible per automated findings will come back with a list of items that for the automated approval to be valid that the mortgage loan borrower needs to provide.

Conditions Required By The Automated Underwriting System

Examples of conditions requested by the Automated Underwriting System may be the following

  • verification of rent
  • reserves
  • leases on departing properties
  • certain paperwork and documents
  • written payment agreements
  • or collection accounts or judgments to be satisfied

Mortgage lenders with no overlays will just go off the approve eligible automated findings.

Lender Overlays

What are Lender Overlays

Lenders with no overlays will not have additional lending requirements besides the conditions from the Automated Underwriting System.

Homebuyers who need a direct lender who specializes in mortgage loan programs 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 national team of licensed and support personnel are available 7 days a week, evenings, weekends, and holidays to take your calls and answer all of your questions.

Refer Ineligible Per Automated Findings

Refer/Caution Per Automated Underwriting System means that the borrower does not qualify for the particular loan program.

  • Ineligible means the borrower does not meet the criteria of the mortgage loan program
  • For example, a refer/caution per automated findings will occur if a borrower has not met the mandatory waiting period after bankruptcy and/or foreclosure
  • FHA lending guidelines state that a borrower cannot qualify for an FHA Loan after a Chapter 7 Bankruptcy unless they had passed a two year waiting period after a Chapter 7 Bankruptcy discharged date
  • There is a three-year waiting period to qualify for an FHA Loan after a foreclosure, deed in lieu of foreclosure, and short sale
  • There is no waiting period after a Chapter 13 Bankruptcy discharged date to qualify for FHA and VA Loans
  • There is a four-year waiting period to qualify for a conventional loan after a Chapter 7 Bankruptcy, deed in lieu of foreclosure, short sale
  • There is a two-year waiting period to qualify for a conventional loan after a Chapter 13 Bankruptcy discharged date
  • There is a four-year waiting period to qualify for conforming loans after Chapter 13 Bankruptcy dismissal date per Fannie Mae and Freddie Mac Guidelines
  • Those who have recently filed for a Chapter 13 Bankruptcy can qualify for an FHA Loan one year into their Chapter 13 Bankruptcy with the Chapter 13 Bankruptcy Trustee approval

Borrowers need to show they have made timely payments to their creditors for at least 12 months.

Refer Eligible Per Automated Findings

Refer Eligible Per Automated Findings means that the borrower does qualify for a mortgage loan:

  • However, the automated underwriting system cannot render a decision
  • The mortgage loan application may need to be downgraded to a manual underwriting
  • Manual underwrites on FHA and VA Loans are very common

All FHA and VA manual underwriting files require verification of rent.

Verification Of Rent

Verification of Rent is only good and valid if and only if the renter can provide 12 months of canceled checks:

  • Renters need to be timely on all rental payments for the past 12 months
  • Renters can also provide 12 months bank statements if they have been paying their monthly rental payments online via bank transfer from their account to their landlord’s bank account
  • If the renter has been renting their home or apartment from a registered property management company, then canceled checks is not required
  • Verification of rent form completed and signed by the property manager of the property management company can be used in lieu of 12 months canceled checks or 12 months bank statements
  • I have not heard of any lenders that do a manual underwrite on conventional loans

All manual underwriting requires timely payments for the past 12 months.

Refer Eligible Per Automated Findings: Conventional LoansRefer Eligible Per Automated Findings: Conventional Loans

Since manual underwriting is mainly for FHA and VA Home Loans, borrowers who get a refer eligible per automated findings on conventional mortgage loan applications, downgrading it to a manual underwrite may not be an option.

  • However, the mortgage loan originator can play around with the Automated Underwriting System where they can get the refer eligible per automated findings to an approve eligible
  • The mortgage loan officer can see if they add more reserves, or put down a higher down payment if the automated underwriting system will render an approve eligible per automated findings
  • If all else fails, maybe the borrower’s credit scores may need to get increased

After credit scores improve, the loan may try running it through the automated underwriting system again.

Qualifying For A Mortgage With A Direct Lender With No Overlays

Borrowers who need to qualify for a home mortgage with a national mortgage company licensed in multiple states with no overlays on government and conventional loans, please contact us at Gustan Cho Associates Mortgage Group. A large percentage of our loans are manual underwrites. Over 75% of our borrowers are folks who could not qualify at other lenders due to their overlays. Contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com.

2 Comments
  1. Milton Chan

    Hi, I’m writing this request on behalf of my mom. She live in California. She wants to do a cash-out refinance of her home to finance building ADU property on the same property, but she just got her Chapter 13 bankruptcy discharged last July. Is it possible for her to qualify for a refinance or a HELOC?

  2. Pamela Norris

    Great blog from Gustan Cho Associates and great YouTube video from Alex Carlucci on key to getting an approve/eligible per automated underwriting system (AUS) on VA loans is to have timely payments in the past 12 months. Love you guys. I have been a subscriber of Gustan Cho Associates for the past several years. I want to use my VA loan to buy a home my credit is not very good I do have some charge-offs on my credit which I am working with Lexington Law to get rid of them but I would like to buy a home I am moving to Texas soon and would like to have a home to live in Texas that I own

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