In this article, we will discuss and cover the VA automated findings on the automated underwriting systems (AUS). VA loans has more lenient agency mortgage guidelines than any other loan program. All VA loans need to go through the Automated Underwriting System for VA Automated Findings.
What is the Automate Underwriting System (AUS)
The Automated Underwriting System (AUS) is a highly-sophisticated computerized system. Loan Officers enter borrowers’ data into the Automated Underwriting System. Within a matter of seconds, the Automated Underwriting System can thoroughly review and analyze a borrower and see if they meet the minimum agency mortgage guidelines. The AUS will take into account and analyze the credit report, scores, employment history, credit payment history, public records, asset/income data, and render VA Automated Findings.
How Does The Automated Underwriting System Work
The AUS is an amazing high-tech system used by all mortgage lenders. The Automated Underwriting System has been programmed with specific algorithms. The AUS System will not render VA Automated Findings if the borrower does not meet any guidelines of the VA. Below are the VA Automated Findings that are rendered by the Automated Underwriting System:
- Approve/Eligible per AUS which means an automated approval
- Refer/Eligible which means the AUS cannot render a VA Automated Findings Approval
- With a refer/eligible, the file can be downgraded to a manual underwrite
- Refer/With Caution which means the borrower does not meet VA Agency Mortgage Guidelines
VA Agency Mortgage Guidelines Versus Lender Overlays
Gustan Cho Associates is a mortgage broker licensed in multiple states. We are different than other lenders due to its no overlays policy on government and conventional loans. Gustan Cho Associates Mortgage has no overlays on FHA, VA, USDA, or Conventional loans. We just go off the automated findings of the Automated Underwriting System (AUS). If borrowers get approve/eligible per AUS and can meet all the conditions of the VA Automated Findings, the loan will close. Borrowers can rest assured that we will not just close the loan but will close it on time. Very rarely do delays happen.
The Reason For Delays in the Mortgage Process
If delays do happen, it is either because of appraisal issues, properly flips, or the sellers needing to delay the home loan closing. All lenders need to follow minimum agency lending guidelines which are determined by the Automated Underwriting System. Lenders can have additional guidelines that are above and beyond the AUS. The additional lending requirements imposed by lenders are called lender overlays. Example of lender overlays includes higher credit scores, lower DTI, outstanding collections, charged-off accounts being paid off, manual underwrite, and other lender requirements. Gustan Cho Associates has no lender overlays on government and conforming loans.
The Automated Underwriting System
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 the minimum agency guidelines rendered with AUS Approval. Borrowers with prior bad credit issues and lower credit scores, outstanding collections, and charged-off accounts should seek the consultation of a direct lender with no overlays.
VA Automated Findings: VA Guidelines Versus Lender Overlays
Not all lenders have the same VA Lending Requirements. Just because one lender may say no does not mean another lender will not accept a borrower. In this paragraph, we will go over the minimum VA Mortgage Guidelines versus overlays imposed by many lenders. The Department of Veterans Affairs does not mandate a minimum credit score requirement on VA loans.
Lender Overlays by Mortgage Companies
Many Lenders require a 620 to 640 credit score on VA loans. This holds true even though the VA has no minimum credit score requirements.Many lenders require a maximum debt to income ratio requirement of 41% to 50% when the VA has no maximum debt to income ratio cap. There is no maximum loan limit cap on VA loans. VA allows borrowers under 580 credit scores and down to 500 FICO. Most lenders will not touch any borrowers under 580 FICO. The VA does not have a minimum credit score requirement. Many lenders do not do manual underwriting on FHA and VA loans.
Outstanding Collections And Charge-Off Accounts Do Not Have To Be Paid With VA Automated Findings Approval
The VA does not require borrowers to pay off outstanding collections and charged-off accounts. Many lenders will require outstanding collections and/or charged-off accounts. This is a common lender overlay by lenders. The VA 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 approve/eligible per AUS. The VA allows manual underwriting on VA loans. Many lenders will not accept manual underwriting on VA loans,
VA Mortgage Process During Chapter 13 Bankruptcy
Borrowers can qualify for VA loans during Chapter 13 Bankruptcy Repayment plan with Trustee Approval after making 12 timely payments to the courts with manual underwriting. Most lenders will not accept any borrowers in a current active Chapter 13 Bankruptcy Repayment. There is no waiting period after Chapter 13 Bankruptcy is discharged to qualify for VA loans. Most lenders will require a two-year waiting period after the Chapter 13 Bankruptcy discharge date as part of their overlays. For more information about the content in this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at firstname.lastname@example.org. The Team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.