Automated Underwriting
One of the biggest changes in mortgage lending to come along the last few years is automated underwriting or desktop underwriting, as it’s sometime called. Developed by Fannie Mae and Freddie Mac, the goal was to streamline the loan process and improve the quality of loans these agencies purchased from banks and mortgage brokers.
This marriage of the Internet with a vibrant secondary market that buys the loans from banks and mortgage brokers is a huge plus for home buyers.
How the System Works
When you apply for a mortgage, the loan officer enters your employment, income, assets, and credit history into a program that is connected to a Fannie Mae or Freddie Mac computer. The program compares your loan data to a programmed standard. If your application is within the standard, you’ll get a quick approval. If it’s not, you’ll get a quick no. If it’s close but not quite good enough for approval, your application will go to an underwriter, who will look at it more closely.
Sometimes your application may get rejected, but with a little tweaking, your loan officer can get it approved. Paying off a credit card to increase a credit score or verifying ongoing overtime for example, can make your application fly the second time around.
One of the biggest changes in mortgage lending to come along the last few years is automated underwriting or desktop underwriting, as it’s sometime called. Developed by Fannie Mae and Freddie Mac, the goal was to streamline the loan process and improve the quality of loans these agencies purchased from banks and mortgage brokers.
This marriage of the Internet with a vibrant secondary market that buys the loans from banks and mortgage brokers is a huge plus for home buyers.
How the System Works
When you apply for a mortgage, the loan officer enters your employment, income, assets, and credit history into a program that is connected to a Fannie Mae or Freddie Mac computer. The program compares your loan data to a programmed standard. If your application is within the standard, you’ll get a quick approval. If it’s not, you’ll get a quick no. If it’s close but not quite good enough for approval, your application will go to an underwriter, who will look at it more closely.
Sometimes your application may get rejected, but with a little tweaking, your loan officer can get it approved. Paying off a credit card to increase a credit score or verifying ongoing overtime for example, can make your application fly the second time around.
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