Automated vs. Manual Underwriting – Knowing the When & Why

There’s no greater responsibility than determining whether a borrower meets the requirements to have their loan approved. There are 2 distinct paths this process can take.

Automated Underwriting

Automated Underwriting is typically sufficient for borrowers with high credit scores, low to debt to income ratios and abundant funds available for a down payment. Loan Prospector (LP) and Desktop Underwriter (DU) are used by most Lenders/Banks and are setup based on the requirements of each institution. Borrower information in the form of scanned documents from the LOS are loaded into the platform(s) where a thorough review is run, information is validated, and a preliminary decision is given.

While Automated Underwriting is sufficient in many cases, a second look by a trained professional may be warranted or even requested by the borrower if they’ve been rejected through the automated process.

Manual Underwriting

When a loan has been referred for Manual Underwriting, the borrower in essence gets a second chance to prove their worth. Perhaps, they have sources of income that are difficult for the AUS to capture accurately or have been completely overlooked. The underwriter methodically validates the data in the (LoS) against institutional guidelines and based on their extensive experience in the field, renders a decision. No software is used during the process and the underwriter may request additional documentation from the borrower to substantiate their worth.

At 247Digitize, our experienced professionals are well-versed in supporting both forms of underwriting. Contact us today to see how outsourcing mortgage underwriting services to a third party can save your company time and money.