Automated Underwriting
Fannie Mae and Freddie Mac are the two largest companies that purchase mortgages from other lenders in the United States. Many lenders will underwrite their files according to their guidelines, but to ensure the eligibility to be purchased by Fannie Mae and Freddie Mac, underwriters will utilize what is called automated underwriting. This is a tool available to lenders to provide recommendations on the risk of a loan and borrower and it provides the amount of documentation needed to verify the risk.
It is important to remember that the approval and feedback is subject to the underwriter's review. It is also the responsibility of the underwriter to evaluate the aspects of the loan that is beyond the scope of automated underwriting. In short, it is the underwriter that approves the loan, not the automated underwriting.
On the other hand, automated underwriting has streamlined the mortgage process by providing analysis of credit and loan terms in minutes rather than days. For borrowers it reduces the amount of documentation needed and may even require no documentation of employment, income, assets or even value of the property. Automated underwriting tailors the amount of necessary documentation in proportion to the risk of the loan.
Read more about this topic: Mortgage Underwriting In The United States
Famous quotes containing the word automated:
“Now, as always, the most automated appliance in a household is the mother.”
—Beverly Jones (b. 1927)