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Critics Proved Wrong! Automation Has Made Underwriting More Customer-Friendly and Transparent

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Automated underwriting systems have brought in significant cost savings and streamlined mortgage business processes. The elimination of inefficiencies has worked well for lenders and borrowers. Automated underwriting is thus being increasingly adapted to make the loan origination process better, simpler, and faster. A recent study by Washington University has found that 60-70% of residential mortgage origination has been facilitated by automated underwriting and the numbers are steadily moving north.

Loan origination is rife with documentation and every application requires a lot of supporting data to minimize risk for the lender. Lenders submit applications to underwriters who review borrowers’ financial viability, the veracity of supporting documents and check for compliance. Personal and financial data like credit score, loan-to-value ratios, property values, borrower-debt ratios and credit histories are taken into account to consider your loan application. Statistical models based on credit and mortgage data have allowed artificial intelligence, which reduces risk to the lender.

Automated valuation models, scorecards, and review tools are excellent sources of data, but many companies are transitioning into new tools which can be integrated with analytics. This would help in minimizing the risks by co-relating data information with the external environment. The new RESPA-TILA guidelines have shortened the timelines considerably and therefore it is important that appraisers or underwriters efficiently complete their tasks to make loan origination faster.

Critics have always upheld the view that automated underwriting would become extremely insensitive by keeping out minorities and credit-challenged applications. The human touch cannot be completely removed but the use of technology has become imperative. Automation coupled with professional expertise would be the way forward. Mortgage software has been enabling lenders and organizations to stay ahead of the compliance curve. With new guidelines and shortened timelines, speedy processing and efficient communication can be enabled only with automation.

Automation has made underwriting faster, accurate and better. Lenders and borrowers have been immensely benefitted through:

  1. Reduction in documentation wherein automated underwriting only asks for recent pay stubs compared to earlier submissions of the previous 2 years of W-2s.
  2. Loan origination risks are minimized as the software red-flags problem areas for the appraiser before the reports are submitted to the lender. Frequent returns to the appraiser for modifications are thus averted.
  3. Much faster processes as reports are generated within minutes.
  4. Consumers save on their closing costs
  5. The loan application can be submitted before the property is identified and the customers have an upper hand while bargaining with the seller.


Technology has become an integral part of the mortgage process with loan origination reduced as per the new compliance guidelines. It has immensely benefitted underwriters by delivering tools that have streamlined and expedited the appraisal process without compromising on the quality.

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