What is aus in mortgage?

Introduction

In the world of mortgages, there are various terms and abbreviations that can be confusing for those who are not familiar with the industry. One such term is “AUS,” which stands for Automated Underwriting System. This article will delve into what AUS means in the context of mortgages and how it impacts the loan approval process.

Understanding AUS in Mortgage

Definition: An Automated Underwriting System (AUS) is a computerized system that evaluates loan applications based on predefined criteria and algorithms. It is designed to streamline the underwriting process and provide lenders with a quick and efficient way to assess the creditworthiness of borrowers.

Role of AUS: AUS plays a crucial role in the mortgage lending process. When a borrower applies for a mortgage, the lender collects various financial documents such as income statements, credit reports, and employment history. These documents are then inputted into the AUS, which analyzes the data and provides an initial assessment of the borrower’s creditworthiness.

Factors Considered by AUS: The AUS takes into account several factors when evaluating a loan application. These factors typically include credit scores, debt-to-income ratios, employment history, and the loan-to-value ratio. The AUS compares the borrower’s information against predefined guidelines set by the lender or the secondary market entities such as Fannie Mae or Freddie Mac.

Benefits of AUS: The use of an AUS offers several benefits for both lenders and borrowers. For lenders, it provides a standardized and objective evaluation of loan applications, reducing the potential for human error and bias. It also speeds up the underwriting process, allowing lenders to make quicker decisions on loan approvals. For borrowers, the AUS provides a more efficient and streamlined application process, potentially resulting in faster loan approvals and reduced paperwork.

Types of AUS: There are several AUS platforms available in the mortgage industry. Some of the most commonly used systems include Desktop Underwriter (DU) by Fannie Mae, Loan Prospector (LP) by Freddie Mac, and FHA TOTAL Scorecard by the Federal Housing Administration. Each AUS has its own set of guidelines and criteria, tailored to the specific loan programs they support.

Conclusion

In summary, an Automated Underwriting System (AUS) is a computerized system used by lenders to evaluate mortgage loan applications. It analyzes various factors such as credit scores, debt-to-income ratios, and employment history to determine the creditworthiness of borrowers. The use of AUS streamlines the underwriting process, providing lenders with a standardized and objective evaluation of loan applications. It also offers benefits for borrowers, including a more efficient application process and potentially faster loan approvals.