What Exactly is a Manual Underwrite?

Real Estate News Article

< Back

What Exactly is a Manual Underwrite?

Written By: David Reed
Sunday, April 21, 2019

Today, loans are preapproved with an Automated Underwriting System, or AUS. When someone fills out an online application, the digital file is downloaded by the lender, reviewed and then entered into the AUS. This process is a rapid one, as the ldquo;findingsrdquo; of the submission are returned within a matter of moments. This speeds up the loan approval process tremendously. Prior to the advent of automated underwriting systems, the loan file was documented prior to submitting for an approval. With an automated system, the process is reversed. The loan is submitted for evaluation and documented afterward.

Note, the result of a submission isnrsquo;t a loan approval. Instead, itrsquo;s provides the lender with guidance on how to properly document the loan in order for the loan to be eligible for sale in the secondary market. Itrsquo;s the lender that approves the loan, not the AUS.

Most findings run down a basic checklist of items needed and theyrsquo;re fairly standard. Most recent pay check stubs covering 30 days, W2 forms from the last two years, tax returns and other pieces of documentation are listed.

The lender reviews the list, includes the items mentioned in the findings, and then sends the loan to the underwriter for a final review. This final review makes sure that whatever is asked for by the findings matches up with what is included in the file. Once that determination has been made, loan papers are prepared for delivery to the settlement agent.

But sometimes therersquo;s a hitch. Sometimes the findings come back with a term listed as ldquo;refer/eligible.rdquo; A submission returned with a response means the lender must make the determination without the benefit of an automated approval. A loan with a refer attached does not mean the loan has been turned down, but there is something that is holding up an automated approval. The lender can review and approve the loan internally and still be able to sell the loan in the secondary market. That is, as long as the items causing the loan to receive such a status have been resolved.

A common reason for a refer status is having a bankruptcy listed in the credit history. For example, there is an FHA loan submitted and a Chapter 13 discharge is showing up in the findings less than two years old. A refer/eligible will be the result because the discharge was less than two years old. Another reason is a thin credit file. A thin credit file is a credit report with very few, if any, open credit accounts.

When a lender receives a refer/eligible, the task is to find other positive aspects of the loan file that compensate for whatever is causing the application to be returned without a preapproval. An extended job history is a compensating factor. Having cash reserves left over after the loan closes is another. Maybe there is another source of regular income that doesnrsquo;t have a long enough history of being received.

Borrowers donrsquo;t have to figure out on their own how to correct a refer/eligible, the loan officer will be able to provide a list of what is needed. Once the items causing the refer/eligible are included in the file, the loan can then be returned to the underwriter for a final review and ultimate approval.





Copyright© 2019 Realty Times®. All Rights Reserved

Updated: Sunday, June 16, 2019

Summer Dcor Trends: What to Lo...
This year, itrsquo;s all about color, texture, and a little something different. Here are th...

5 Questions to Ask When Choosi...
Before putting money down for a deposit on your new kitchen remodel, you need to look at sev...

What Happens When Your Sales C...
An external influence might be someone forced to >Most often the appraisal reflects the s...

Copyright ©2019Realty Times®. All Rights Reserved

Housing Rebound: Factors to Consider
In Miami we have had an incredible year of growth with an ever shrinking supply of condos...

Hoteliers Buy Versace Mansion at Auction
Gindi Family and Nakash Family of New York were the winners of the auction for Casa Casuarina...

Stunning Estate for Sale on Allison Island
Allison Island is one of the man made islands comprising Miami Beach. One half of the island...

Avant Garde and Luxurious Penthouse on Fisher Island
Fisher Island is home to some of the highest net worth individuals in Miami. It is a private...

6000 Indian Creek, Condominium Spotlight
6000 Indian Creek is a Sieger Suarez project that was completed in 2007 and consists of...

$35 Million Buys you THIS on Star Island
$35 Million for a home on Star Island is par for the course in Miami Beach real estate....

Development Update
It is looking like a dusty winter season in Miami, with all the construction rapidly underway,...

North Bay Road Charm, 4330 North Bay Road
4330 North Bay Road is a stunning example of Mediterranean architecture in Miami Beach....

Best Home Improvements for Resale Value
It could not be a better time for a homeowner to list their home for sale in Miami. The...

Biscayne Gets a New Development
The Melo Group of developers acquired 601 NE 23rd St last year and have conceived of 23...

520 West Ave Residence 2301
520 West Avenue is home of the Bentley Bay. Bentley Bay is comprised of two modern towers...

Spice 2013, Guide 101
Miami Spice is a program whereby most of the restaurants in the city encourage people to...

Hollywood has a New Hotel
Margaritaville Hollywood is coming to Hollywood Beach and is likely to completely alter...

Sustainable Waterfront Home on Normandy Isle, 1.85 Million
Rarely on the market do we find completely sustainable, off the grid, homes in Miami Beach....

Housing Inventory on the Rise at the Close of Summer
The Wallstreet Journal released numbers via Realtor.com regarding the inventory of available...

Warm Spanish Style Home Listed on the Sunset Islands
1844 W. 23rd Street is listed on the Miami Beach luxury real estate marketplace for $11...

Former Gansevoort Getting Complete Eco-Renovation
Last year the Perry Hotel, formerly the Gansevoort, was purchased for $230 million. The...

Affordable Luxury Waterfront on Hibiscus Island
A home that is considered affordable in Miami terms for waterfront is generally between...

Bart Reines New Masterpiece Released on the Market
Bart Reines is one of the worlds most impressive modern architects living, and he has just...

New Listing on La Gorce Island
98 La Gorce Court has just been listed for sale. This over 7800 square foot home with 8...