Automated Underwriting – LP vs DU

The auto industry has done it with self parking cars.  The vacuum industry has done it with automated vacuums.  Automation is now a part of the mortgage industry as well!

Mortgage lending depends on “automated underwriting”.   Automated underwriting involves a computerized analysis for each loan application.  2 primary automated underwriting systems currently exist in mortgage lending.  They are:

  1. Desktop Underwriting (“DU”)
  2. Loan Prospector (“LP”)

Desktop Underwriter is governed by Fannie Mae while Loan Prospector is governed by Freddie Mac.  While the two systems are similar, subtle difference between the two exist. In fact, loan  DU can approve a file while LP may decline it and vice versa.

After subbing a loan file to either system, loan officers receive an automated report.  The report outlines the approval status for the application.  DU approvals are known as an “approve/eligible” while LP uses “accept” to signal approval.  Both findings verify that the home loan application meets guidelines.  An AZ mortgage company will be able to close the loan based on the fact that they have the “backing” of an automated underwriting approval.

2 Underwriting Options is Better Than 1

With regard to automated underwriting, more is better.  Some Phoenix area mortgage companies work strictly off of Fannie Mae and DU while others utilize Freddie Mac and LP.  In most cases, having one automated underwriting outlet is not an issue.  However, in situations when one system declined a loan having both pays off.   Running a loan through the other system may result in approval.

Having access to both DU and LP makes a big difference for Arizona condo buyers.

Putting a loan through either system is as simple as your Arizona loan officer pushing a button.  Mortgage lenders with both DU and LP use either or both.  These lenders do not need an approval on both.

By Jeremy House
Google

Comments

  1. Can you please let me know some scenarios where loan applications that DU will approve and LP?

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