I've Applied for a Mortgage: What is Automated Underwriting?

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI

I've Applied for a Mortgage: 

What is Automated Underwriting? 

 

     If you've read much about Mortgage financing ... or talked to a Mortgage Lender lately, you've probably heard the term "Automated Underwriting" ... 

     This form of Underwriting, performed electronically by a computer, has become the method by which the majority of banks and lending institutions make a decision regarding the "lendability" of a potential Borrower.  It's the analysis of all relevant financial data collected from an Applicant.

     First implemented in the late 1990's, Automated Underwriting has now become the preferred method of analyzing Mortgage Applications.  The 2 most obvious pluses found in Automated Underwriting are:

  • The results are deemed more objective and void of human prejudices or bias 
  • Results are typically received much more quickly than those obtained from humans


     As a Mortgage Lender assisting my Applicants, I want to be able to supply our Automated Underwriting with the best and most complete information available.  That means prior to submission, I must be thoroughly knowledgeable as to what will be demanded by the Automated System to receive an Approval for my clients.  The better educated I am regarding Underwriting demands, the more likely it is I (and my clients) will find success with any file.

    

     An Automated Underwriting system considers the basics, or "bones" of an Applicant's finances.   It considers:

  • The Applicant's Outstanding Credit 
  • Credit Historyhttp://www.genemundt.com/MortgageChecklist.aspx
  • The Value (Appraisal) of the Property being financed
  • The type of Mortgage Financing being applied for
  • The Applicant's capability to repay their Mortgage
  • The Applicant(s)' Income
  • Their Employment
  • Their Bank Accounts
  • Assets
  • and More ...


     The above information must be fully-supported by documentation.  Physical proof of income (including copies of paystubs, W-2's, etc.), bank statements, tax returns, any decrees/judgements, investment accounts, and more may be required from a Mortgage Applicant prior to submission of their file in to Automated Underwriting.  (For a Checklist of those items typically needed for Mortgage Application, click HERE).

     Underwriting is where a Mortgage Lender's level of experience and expertise come into play and pays-off for the client.  An experienced Mortgage Lender will know the "ins-and-outs" of any Mortgage Program's Underwriting requirements and fully-prepare their Client and their loan file prior to submitting it for Underwriting Approval.  Fewer issues will need to be addressed after submission as a result.    

     While the goal for the client and Lender is to obtain an "Approval or Accept" rating, it's only the beginning.  The full processing of the file then begins, and the second or "neutral" layer of verification of income and assets then occurs. 

     Receiving the Automated Underwriting Approval simply allows a file to move forward to meet the review and scrutiny of the human portion of the Underwriting Process, where the validity and accuracy of the supporting data and loan application are attested to.  

     When all goes well, the objective becomes to first obtain the "Clear to Close" from the human (more formal portion) of the Underwriting review process. Then all the parties involved within the transaction must structure the Closing date and contribute numbers and figures for that Closing.

     I've Applied for a Mortgage: What is Automated Underwriting? Automated Underwriting is important to the Mortgage Process and to Borrowers.  It's the "test" that a Borrower's finances and documentation must pass in order to continue on to the ultimate Mortgage nirvana ... the Closing.

   

http://www.genemundt.com/ContactUs.aspx

 
     *  Hoping to Buy, Refinance, or Construct a home in New Lenox, another Lincoln-Way Community, Will County, or elsewhere in ChicagolandContact me!  I'll assist you from first contact, through Pre-Qualification, Automated Underwriting, and on to successful Mortgage Closing.
     I can be easily found at:

Direct:  815.524.2280815.524.2280
Cell or Text:  708.921.6331708.921.6331
eFax:  815.524.2281815.524.2281
 
Click HERE for a FREE Mortgage Consultation!
Ready to Apply for your Mortgage?
https://1609956119.secure-loancenter.com/WebApp/FullAppLogin.aspx
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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Kate McQueen 02/17/2014 10:52 PM
  2. Fred Griffin, on leave of absence from ActiveRain 02/27/2014 10:32 AM
Topic:
Lending / Financial
Location:
Illinois Will County Joliet
Groups:
Realtors®
Mortgages
Chicago Area Real Estate BUZZ!
Buyer Information - What Buyers Need to Know in Today's Market
Bananatude
Tags:
mortgages
loans
mortgage approval
mortgage lender
automated underwriting
mortgage process
applying for mortgage

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Show All Comments
Rainmaker
1,381,817
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Gene, loan officers have to be very thorough or else something could fall through the crack and cause a denial. If this happens do you just resubmit or is there a limit to the number of times a loan can be processed?

Feb 17, 2014 09:38 PM #12
Rainmaker
1,239,777
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

And to mine, Joan ... absolutely beautiful ...

Nevin:  Your comment is especially appreciated.  A thumbs up from a respected fellow Lender!  Thank you ...

Myrl:  Exactly what I hope to do ... de-mystify .. and educate.  Takes the fear out of the exercise ...

Thanks, Judy.  I hope the explanation helps future Borrowers ...

George:  Definitely true .. it's just one important step in the process.  It's the "go ahead" for the remainder of the process ...

Ira:  True ... and proves exactly why experience and expertise are so important when seeking a Lender ...  success depends upon it ...

Laura:  You show why AR is so beneficial to members and to readers.  It truly is educational ...

Aaron:  These days you pretty much have to get Automated right ... or it's a hard uphill battle from there ...

Wika:  You're welcome!

Emily:  And thank you for stopping by!  Good to see you .. and read your comment.  I totally agree with you.  The better our clients understand the process in its totality, the better .. and more success found too ...

Gabe:  Glad you found the explanation helpful ... and beneficial ...

Michael:  I can only speak for myself, but I believe most Lenders try again.  I know I do when I receive a denial.  Sometimes it's just a matter of re-packaging the info in another way.  Sometimes additional (or less) info is needed.  You learn what the issue is, address it, make corrections, get any additional info needed, and try again. 

Gene

 

Feb 17, 2014 10:12 PM #13
Rainmaker
303,164
Kate McQueen
CB&A Realtors - Cypress, TX
Tailored service for your real estate needs!

Great information for home buyers.  Will re-blog.

Feb 17, 2014 10:48 PM #14
Ambassador
1,207,659
Amanda Christiansen
Christiansen Group Realty (260)704-0843 - Fort Wayne, IN
Christiansen Group Realty

More great information here Gene.  I love reading your blogs about mortgages and the lending process.  Re tweeting for sure!

Feb 17, 2014 11:22 PM #15
Ambassador
304,762
Linda K. Mayer
License # 01767321 - La Verne, CA
Realtor, SRES, SoCAL, A REALTOR YOU CAN TRUST

Great explanation, Gene.  I had to pin it to my Mortgage and Credit Info board... Thanks for the pin!

Feb 17, 2014 11:50 PM #16
Rainmaker
1,028,721
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Thank you for sharing.  The mortgage process seems to get more and more confusing each year. 

Feb 18, 2014 01:56 AM #17
Rainmaker
1,239,777
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Thank you so much, Kate!  Hope it proves interesting and valuable ...

Jared:  I'm honored .. thank you!

Linda:  Appreciate the "pin" and you spreading the info/word ...

Rob:  Exactly why I keep hammering away and educating about it.  Hopefully it helps readers ...

Gene

Feb 18, 2014 02:21 AM #18
Rainmaker
1,560,731
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Great explanation, and then the real live underwriter reviews the file at some point -- then the fun begins!  LOL

Feb 18, 2014 02:46 AM #19
Ambassador
759,849
Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

You can't can much more clearer than this Gene.  You really have a knack for simplifying things Gene.

Feb 18, 2014 05:21 AM #20
Rainmaker
1,239,777
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

It sure can seem that way at times, Carla!  But this is at least addressing some of those issues much earlier in the process ... a plus, I think ...

Charita! Charita!!  So glad to see you!  But hmmmm ... maybe simple minds do well at simplifying???  I'm hoping it's just my experience showing through from over 3 decades at my job!!

Gene

Feb 18, 2014 05:57 AM #21
Rainmaker
524,333
Lisa Friedman
Great American Dream Realty - Essex, VT
30 Years of Real Estate Experience!

Gene, this was an excellent post chock full of information. It gives prospective buyers a good idea of what to expect when applying for a mortgage.

Feb 20, 2014 12:23 AM #22
Ambassador
1,769,940
Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

This is information I did not know Gene.Thanks for sharing it with us. I really feel like I am getting the inner workings of the mortgage industry from your expertise.

Feb 20, 2014 12:52 AM #23
Rainmaker
1,372,904
Jeff Jensen
The Federal Savings Bank/Lending in 50 states - Greenwich, CT

So few aspiring buyers know anything about automated underwriting and findings.

Feb 20, 2014 06:50 AM #24
Rainmaker
1,239,777
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Thanks, Lisa!  Glad you found it beneficial ...

Noah:  I'm glad I could fill in an educational gap for you.  That makes me feel good!

Jeff:  True ... hopefully this info helps them understand why we Lenders have to ask for so much info and documentation ...

Gene

Feb 21, 2014 01:07 AM #25
Rainmaker
1,061,962
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Gene, this is an excellent explanation of automated underwriting that will help all those seeking a mortgage to better understand the process.

Feb 21, 2014 01:04 PM #26
Rainmaker
1,239,777
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Thanks, Sharon.  You mention the exact reason for the post ... education ...

Gene

Feb 21, 2014 10:04 PM #27
Rainmaker
529,320
Hella M. Rothwell, Broker/Realtor®
Carmel by the Sea, CA
Rothwell Realty Inc. CA#01968433 Carmel-by-the-Sea

Gene: Automated Underwriting makes so much sense, it gets the information you need to get a loan into the system in a streamlined manner. I would think this really speeds of the whole process. This is excellent information that all our clients who are going for a loan should read. 

Feb 27, 2014 11:03 AM #28
Rainmaker
1,239,777
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Thank you, Hella.  You're absolutely right .. it does move the process along more quickly and fluidly.  It's only the first step ... but it's a major hurdle when passed.  Glad you found the info beneficial ...

Gene

Feb 27, 2014 11:10 AM #29
Rainmaker
350,532
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

This is where having an experienced loan officer pays off.  If the loan officer does an inadequate job at determining the information to be input into the AUS, the Approval (or Accept) is useless and the loan could eventually get declined by the underwriter.  It is so important that the LO is an expert at reading the forms and inputting the true values.

Feb 27, 2014 10:02 PM #30
Rainmaker
1,239,777
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Eric:  Definitely true.  Now more than ever, it's vitally important to work with experienced professionals.  It's no time to work with a rookie ...

Gene

Feb 27, 2014 11:09 PM #31
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Rainmaker
1,239,777

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

708.921.6331 - 40+ yrs experience
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