Magazine article American Banker

Editor's Note

Magazine article American Banker

Editor's Note

Article excerpt

Technology continues to have a dramatic impact on how mortgage lending tasks are performed.

In this issue of Mortgages 2.0, American Banker examines the growing use of automated underwriting, which in the last few years has grown to dominate the opening stages of the mortgage process.

Borrowers still need to fill out an application, but now they can do so on a computer screen. Credit checks must be run, but they can now be completed in minutes, with a few keystrokes. Full property appraisals, inspections, and title work remain vital parts of the process, but they are now increasingly transmitted through e-mail and Web-based files to lenders, brokers, and attorneys - sometimes all at once.

And more important, a lot of this work is being done after the borrower has been approved. If anything, automated underwriting technology has almost flipped the mortgage process, approving the customer and then sniffing around for problems.

On page 13A, Tommy Fernandez asked lenders what they want from automated underwriting systems. Though quick approvals are useful, many lenders and brokers say they want to initiate everything - such as flood, title, credit, and appraisal - at the point of sale.

And what about subprime? On page 8A, Erick Bergquist explores the complexity and risks of giving those with blemished credit, no credit, or alternative-employment status an approval via machine, a practice that is becoming more common But lender beware, some argue; subprime borrowers must be closely examined and underwritten by humans. …

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