Written By: Bonnie Wilt-Hild, Op-Ed Writer
That’s correct, it appears that documentation waivers are slowly beginning to disappear and I don’t mean by exercising due diligence, I mean they are less and less present on AUS findings. Now, I am sure that a lot of you are thinking that I have lost my mind but if you take a good look at your findings you will see what I am talking about, particularly on cases where the credit score is less than 700.
I, my self have just started noticing it and it doesn’t jump out at you on the AUS findings but it’s there. More concerning is that I have super experienced processors and they are missing it. As we moved into the age of automated underwriting, most of us began to read AUS findings to determine what documentation AUS was requiring. In other words, was it asking for one paystub or two, did it ask for a verification of rent or no. This has pretty much been the standard for the most recent 10 years. The elimination of documentation waivers however, has taken a slightly different face and by that I mean the findings are not requesting that we verify certain things like rent or warrant credit, it is simply NOT stating that we don’t have to warrant it. In other words, clear statements such as “No verification of rent is required” or “No explanation for derogatory credit is required” are missing from the findings. In some cases the only thing discussed regarding liabilities is the debts that are being used to qualify, that’s it.
Last week, I was underwriting a FHA case and when reviewing the Total Scorecard findings I was trying to determine the AUS’s standards for documentation i.e. do I need a verification of rent etc per the findings. Remarkably nothing was really addressed in the finding regarding liabilities. In other words, I had no waivers but it also didn’t suggest that I obtain any certain documentation. Big on due diligence anyway, I went with the most conservative approach which was to document everything since I had no written waivers. Once complete I returned the file to my processor and within a couple of hours she came into my office and said that I had asked for a verification of employment and the AUS findings didn’t. Now I have to say she wasn’t complaining, honestly I request them on every case, she just wanted to know what to tell the Loan Officer when he bulked. So I looked at her and said “We didn’t receive a waiver for VOR or credit explanation”. She then opened the file, looked through the AUS finding and sure enough it wasn’t addressed at all. She looked at me and I said, “Exactly, it is not telling us that we do not have to obtain the VOR”. She thought about it for a minute and was like “Wow”.
In closing everyone the fact that our AUS findings is not clearly stating that we do need to collect credit explanations and VOR is not a documentation waiver, quite the opposite. If the findings do not specifically state that we are not obligated to provide that documentation it means that we need it. The area of the AUS findings that seems to have changed the most is the liabilities areas, more and more waivers in general are not being offered so pay close attention to your findings. As I said above if the credit score is not greater than 700 there seems to be no real documentation waivers offered. As always happy underwriting.
About The Author
Bonnie Wilt-Hild - As an op-ed writer, Bonnie holds mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans".