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#205064 - 06/28/04 05:01 PM Automated Underwriting
opie Offline
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opie
Joined: Jul 2003
Posts: 85
Bloomington, IL
How are people handling credit decisions made by an automated underwriter. I specifically would like information on when a "refer" is received. It seems to me that the lack of an approval is a credit decsion in this case, but what do others think.

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Lending Compliance
#205065 - 06/28/04 05:33 PM Re: Automated Underwriting
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
It's been sometime since I worked with automated underwriting, however back when I did the "refers" were placed in a "queue" for an underwriter to look at. As the operations manager I had access to the queue to make sure the "refers" were worked within the allotted time.

We were not automatically notified that a refer was placed, we had to check the queue to see if new refers were entered.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#205066 - 06/28/04 08:57 PM Re: Automated Underwriting
Anonymous
Unregistered

In our case, a "refer" does not necessarily mean the loan is denied. It then becomes a manual underwrite. If the loan is not workable, then the denial reasons typically fall in line with the refer recommendation. DU will state why a refer recommendation is given.

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#205067 - 06/28/04 09:06 PM Re: Automated Underwriting
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Quote:

In our case, a "refer" does not necessarily mean the loan is denied. It then becomes a manual underwrite.




That was also our procedure. I did not mean to imply that "refers" were automatically denials.

The queue gave a manager/supervisor the ability to track the refers to make sure they were acted upon within the regulatory time requirements.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#205068 - 06/29/04 01:07 PM Re: Automated Underwriting
opie Offline
Member
opie
Joined: Jul 2003
Posts: 85
Bloomington, IL
One follow up, between the time the automated system gives you the refer and the manual underwriting if the customer withdraws the loan, do you think it would be acceptable to code the loan as withdrawn for HMDA purposes. I ask because it seems that the automated system not being able to give an approve recommendation is a credit decision, however, I may be overthinking this situation.

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#205069 - 06/29/04 01:34 PM Re: Automated Underwriting
redsfan Offline
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redsfan
Joined: Dec 2000
Posts: 3,455
The Pennant Race
IMO, you've thought about just the right amount. Your reasoning seems sound to me. As noted above, whether or not you have a credit decision is based on your own procedures. As long as a "refer" decision by your automated system requires additional action, you do not have a credit decision yet, and a customer withdrawal should be recorded as that on the HMDA LAR.
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The opinions expressed here are personal and do not represent opinions of my employer.

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#205070 - 06/29/04 03:15 PM Re: Automated Underwriting
Anonymous
Unregistered

Our loan officers that received a refer based on disclosed information were not allowed to convey any negative answer. They told customers that the loan would have to go an underwriter for further review. As long as you do not relay any adverse decision and the customer withdraws, we considered the loan application as a withdrawal. Anytime during the process, it was also the loan officer and loan processor's responsibility to request (not require) reason for withdrawal. If the customer was approved with conditions and withdrew because they got a better rate elsewhere, we considered this a withdrawal. If they stated they could not meet the underwriting condition and could get the same loan elsewhere without the condition, it was considered a denial.

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