Best Practices: Data Integrity & AUS Findings

Written By: Frankie Lacy

When underwriting and processing a loan file, we look to the AUS (automated underwriting system) findings to determine what documentation is required. The recommendations on the report help us package a strong loan that will perform profitably. Although DU, LP, GUS, and Total Scorecard findings are strong tools in risk management, their one weak spot is data integrity.

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The AUS cannot analyze the loan documentation and determine what data should be entered. Nor can the AUS determine how the data should be categorized. It can only suggest policies and procedures after we have completed our analysis and determined the loan characteristics. AUS recommendations can be very misleading because they rely heavily on the accuracy of our review. Some loan characteristics that require a second look are; liabilities and income, property type, and asset types.

One key income category that is frequently mishandled is variable or non-wage earner income. For example, if commission or bonuses are included in the base wage amount instead of separated out, AUS cannot properly read this income. As a result, you may miss the tax return requirement when commission or bonus income represents more than 25% of the total income.

Another scenario I have seen is retirement or trust income entered into the LOS (loan origination system) as “Other”. DU will give a general disclaimer stating the income verification must comply with Fannie Mae guidelines. However, this is an inaccurate finding. DU can read retirement and trust and has specific messaging around these income sources.

When entering non-liquid assets, we must specify exactly what type of asset account is at hand. DU and LP will provide specific messaging regarding what percentage of each non-liquid account can be used to qualify. AUS will also indicate if any additional documentation is required when using funds from these accounts for cash to close.

When reviewing detached properties or single family homes, we often find homeowners association dues on the appraisal or title report. This is a red flag to double check the property type to determine if the subject is a detached/site condo, a PUD, or truly a single family residence within a subdivision. If the subject is a condo or PUD, the AUS must be updated to reflect this information. AUS will then provide a message regarding the type of project review that is required.

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Liabilities, authorized user, collection, and open 30 day accounts should be entered accurately. This gives automated underwriting systems such as DU/LP/GUS/Total Scorecard the opportunity to display messaging around what documentation is required when excluding these accounts from the overall debt ratio.

In the end, the accuracy of the findings is our responsibility. Loan changes that are made throughout the file process must be updated within the AUS. It is imperative to obtain the most accurate messaging on the findings report through meticulous recording of loan terms and characteristics.

About The Author

Frankie Lacy - As an active NAMP® member and a NAMU®-CMMU designee, Ms. Frankie Lacy is a 13-year mortgage industry veteran with extensive conventional mortgage underwriting experience. Frankie is also a mortgage instructor for Mortgage Underwriter University ( Topics of Frankie's expertise include: Fannie Mae, Freddie Mac, USDA Rural Housing, underwriting to investor overlays, self-employed borrowers, personal and business tax return analysis, rental income, condos/co-ops/PUDs, and more. Frankie is a Davenport University graduate with a degree in Business Administration. If you're interested in becoming a writer for NAMP®, please email us at:

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