What is automated mortgage underwriting?


With automated mortgage underwriting loans are processed by dedicated software (almost) completely unattended. The applicant will enter their data on a website or specified terminal. The software will request reports, run financial checks and evaluate the application according to criteria specified by lender. Automated underwriting (AU) speeds up loan application process and assessment, as well as cuts origination fees in the hundreds.

Lenders using AU only need to collect several documents from the applicant - some tax statements and a W2, instead of piling up paper. With AU lenders are able to quickly determine the best loan for the applicant with monthly payments, credit amount and collateral. Automated mortgage underwriting will also help evaluate the terms lenders can later sell the loan to the secondary market and helps serve 2 - 3 times more borrowers, according to statistics.

Since automated mortgage underwriting uses objective data, it achieves better speed and accuracy, is a big curbing factor to predatory lending and helps borrowers avoid unfavorable loan terms.

As officials were worried about automatic underwriting affecting negatively lower income customers, statistical results have shown that automatic underwriting actually help people better qualify for a conventional loan even with little down payment available.

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