Most loan types require the originator to run the file through an automated underwriting system (or two). Two of the most common are Desktop Underwriter (DU) and Loan Prospector (LP). Some lenders use both automated systems and some use only one. For lenders who use both, like Bookend LendingMortgage Company, if the file is not successful in running through one, the lender can try the second one too. Many times when DU does not accept a file, LP will (and vice versa). For conventional loans, generally, the file must receive an “ACCEPT” finding for the originator to approve the loan.
FHA has an FHA Scorecard and RD loans have GUS (Guaranteed Underwriting System). For these government programs, ACCEPT findings may be much more lenient than other loan types. And, fortunately, it is not an absolute requirement to have the automated underwriting accept the loan. Typically more stringent underwriting occurs when the ACCEPT results are not received.