Automated Underwriting
A computer-generated loan underwriting decision. Using completed loan application information, an automated underwriting systems retrieves relevant data, such as a borrower’s credit history, and arrives at a logic-based loan decision. Some applications may be referred to manual underwriting, and some inputs - such as income and assets - must be verified at a later date. Investopedia Says:
Automated underwriting engines can provide near-instantaneous loan approval or denial decisions; therefore, implementing automated underwriting systems can save a considerable amount of time, as manual underwriting can take as long as 60 days to complete.
In addition to the time savings, automated underwriting is preferred because it is based on algorithms, eliminating human bias. Freddie Mac maintains and markets a large automated underwriting engine known as Loan Prospector, and Fannie Mae has an automated underwriting engine known as Desktop Underwriter. Related Terms:
Alternative Documentation
Credit Rating
Fannie Mae - Federal National Mortgage Corporation - FNMA
Freddie Mac - Federal Home Loan Mortgage Corporation - FHLMC
Government-Sponsored Enterprise - GSE
Underwriting |