Craig Robertson is vice president of underwriting at
Waterstone Mortgage Corp. In his role, Robertson oversees
the underwriting department and enjoys finding solutions
for the various challenges that arise during the loan process.
He has more than 20 years of experience in the mortgage
banking industry. Reach Robertson at
The Dream Team
Automatic underwriting systems help
originators and underwriters approve loans quickly
By Craig Robertson
When it comes to reviewing a loan application, nothing short of excep- tional teamwork can ensure prompt urnaround times. For many underwriters, this means they must maintain a strong,
transparent and positive working relationship with
their loan-originator partners.
This cohesive relationship can be enhanced by the
addition of an automated underwriting system, or
AUS. To create the most efficient under writing process
possible, however, loan originators and underwriters
must understand the role and purpose of the AUS.
It is a supplementary tool, not a “be-all and end-all”
technology solution for automatically approving or
denying loan files.
With a proper understanding of the role of an AUS,
underwriters and loan originators can optimize the
effectiveness of their unique responsibilities so that
loans close on time and everyone meets their ultimate
goal of providing the best possible experience for
The role of the AUS
It’s important to remember that an AUS is only as good
as the information entered into it. All of the data compiled in the AUS must still be manually verified and
validated by an experienced underwriter. For those
unfamiliar with how an AUS operates, it can sometimes be misconstrued as the “final answer” for a loan
file, when in fact a manual underwriting component
generally follows every AUS decision.
The AUS is incredibly valuable for credit approvals,
but there is a human element to underwriting that an
AUS will probably never be able to fulfill. A few of the
nuances on a loan application that an AUS may not
pick up include erroneous credit reporting or possible
foreclosures for mortgages that do not appear on the
In addition, it takes some investigation and human
follow-up to verify or disprove the findings of the AUS.
Because an AUS only gives you one piece of the financial “puzzle,” it is crucial for loan originators and underwriters to work together, communicate effectively and
create a streamlined process.
The AUS post-approval process
After the AUS approves a loan, the manual process
begins. An appraisal of the property is the first piece
of the puzzle. Again, this is a part of the loan-approval
process that will always need a human element. The
appraisal team will view photos of the property and
compare the design, style, size and appeal to other
properties in the immediate vicinity.
Next, the underwriter will look at the borrower’s
income and assets. If those aspects are approved, the
credit report will be manually reviewed — even if it
was initially approved by the AUS. A technology sys-
tem won’t always pick up on some of the intricacies of
a credit report, such as disputed accounts or missing
information on mortgage histories.
In a nutshell, credit, capacity and collateral all need
to be taken into consideration when determining
whether a loan will get approved or denied. The details
of each of these areas require careful and thorough
consideration — and accurate information — for the
underwriter to make an informed and wise decision.
The big picture
To create a smooth and easy underwriting process, it’s
helpful if loan originators ensure the completeness of
files before submitting them for review. A couple of
details important to underwriters that loan originators
should keep in mind are:
■ ■ Longevity and variety of credit. At first glance, a
potential borrower may appear to have a good credit
score. Looking deeper, an originator may notice that
the borrower only has two trade lines (credit cards)
and no major expenses or monthly payments. In
this case, the potential borrower’s credit may not be
at the level needed to qualify for a mortgage.
■ ■ Historical data. Information on mortgage histories, auto loans and other significant expenses can
be very revealing. If a borrower has so-so credit, but
has demonstrated an extensive history of making
mortgage and auto-loan payments on time, that
borrower may be more qualified for a home loan
than someone with an exceptional credit score who
has no history of paying off major expenses.
Overall, it’s vital to consider every facet of a potential borrower’s financial picture to determine if a file
will be approved. Of course, this process starts with
the loan originator and is passed on to the underwriter. When both parties are on the same page, the
process will be smoother and quicker.
The bottom line
So, what can loan originators do to ensure their loan
files are closed on time? The single most important
step to take is to make sure underwriters have full disclosure on the borrower at the beginning of the loan
process. Originators who can provide complete and
accurate information to underwriters, as well as disclose any red flags that may arise during the approval
process, should have no problem making sure loans
close on time.
The bottom line is that although an AUS is an ideal
solution for the loan-file approval process, it is not a
complete solution. When proficient loan originators
and underwriters team up — and communicate effectively — the loan process can become truly seamless.
This more collaborative process benefits the borrowers, who are more likely to be pleased with their
overall experience and are then more likely to become
“clients for life.” A happy borrower also is more willing to recommend the services of their originators to
others, which is the most valuable marketing source
anyone could ever ask for. ■
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