Before we submit every loan, we first MUST get an “automated approval” from “DO” or “DU” (Fannie Mae’s “Automated Underwriter”), or from “LP” (Freddie Mac’s “Automated Underwriter”). “DO” stands for Desktop Originator and “DU” stands for Desktop Underwriter – both names are used interchangeably and mean the same thing. “LP” stands for Loan Prospector and is used only for Freddie Mac loans.
FHA Loans also require “Automated Approvals”, borrowing Fannie Mae’s “DU” program but with specialized FHA parameters.
We garner an “Automated Approval” by pumping all relevant data (price, down payment, rate, income, assets, credit, etc.) into the DU or LP program and hope for an “Approval”. These approvals come with a print-out of conditions that most lenders follow without a lot of their own “overlays” (conditions lenders add, over and above a DU approval). Culling and inputting accurate data for a DU approval requires a lot more skill than meets the eye.
Almost ALL of our lenders will not accept a loan unless the loan submission is accompanied by an “Automated Approval”. If we cannot get an “Automated Approval”, we must find a lender (like Reunion Mortgage) that will do a “Manual Underwrite”.
“Manual Underwrites” involve an underwriter scrutinizing every aspect of a file by hand. Such files can have very few weaknesses. Having access to lenders that do “Manual Underwriting” is key, as we often get qualified borrowers for whom we cannot get a “DU” approval because of an error on a credit report, or some other technicality.
DU and LP guidelines tightened up in August, so getting “Automated Approvals” has become more difficult. We actually have clients that we pre-approved in June, who no longer qualify for the same purchase price because of tighter guidelines.
Call Jay Voorhees at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646