Written By: NAMP® Staff Writer
GUS, or Guaranteed Underwriting System, is USDA’s automated underwriting engine. GUS can take some getting used to if you are most familiar with Desktop Underwriter or Loan Prospector. Here are some tips to help you navigate GUS and get the most accurate findings for submission to USDA.
The first tip is to remember to always go to the eligibility tab and update the information listed there. If the loan is submitted to you from a processor or loan officer, they have likely completed this information to the best of their knowledge. However, as the underwriter, you will have the final household member count, eligibility income, and address information to validate this page. Complete this page before moving forward within GUS. If your subject property or household income is ineligible for USDA loans, the transaction may require a decline.
Once you have verified eligibility, you will navigate through GUS using the prompts at the bottom right hand corner of the page. It is advisable that underwriters validate each piece of data in each screen prior to final submission. For example, the property age, checking the indicator box for a new construction property, and validating non-US citizen data must all be done prior to final submission. The LDP/GSA look-up date should also be updated at the time of final submission to avoid delays due to expiration of this date.
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In many cases, the income amount entered into the repayment income section will differ greatly from what was entered in the eligibility screen. The eligibility income estimates the borrower’s highest level of potential future earnings, while the repayment income follows traditional income verification and calculation guidelines. For example: when entering overtime earnings in the eligibility section, you will most likely use the year-to-date earnings to estimate future income from this source. In contrast, you will execute your 24-month average per normal guidelines in the repayment section.
It is similarly important that you are aware of GUS’s unique take on asset verification. The asset amounts listed in GUS must be the LOWER of the most recent statement balance, or the average of the most recent two month statement balances. Example: Borrower’s balance as of a recent transaction history date March 15this $5,000. The February 28th balance was $575 and the January 31st balance was $650. You must execute a two month average $575 and $650, which comes to $612.50. Since this is the lower of the two figures, you must enter $612.50 into GUS instead of $5,000.
There are two important factors here: 1) GUS does not verify cash to close. The verification of cash to close is strictly a lender responsibility; 2) GUS uses any assets listed as verification of reserves. This rule is based on USDA’s definition of reserves, which can be found in the HB-1-3555 Chapter 5. USDA does not consider any asset a reserve unless it is liquid and the borrower can show a two month average of those funds.
When the lender enters assets in GUS, those funds are used as a compensating factor in GUS’s risk assessment of the file. If your risk assessment is acceptable to GUS without any reserve requirement, you may leave the assets section blank and GUS will still issue anaccept/eligible finding. If your loan’s risk is NOT acceptable without reserves, GUS will issue a refer/eligible finding when there are $0 assets listed or the resulting reserves are insufficient. Therefer/eligible finding requires a downgrade to a manual underwrite.
These are just a few tips to insure the return of valid and accurate GUS findings. Following these tips will help to reduce turn-times in obtaining the conditional commitment from USDA. Keep in mind that the conditional commitment is not a credit approval from USDA. Ultimately the verification that the loan meets USDA and investor guidelines is up to the underwriter.
About The Author
All of NAMP® staff writers are veteran mortgage processing & underwriting instructors for Mortgage Underwriter University (www.MortgageUnderwriter.org). They have each conducted numerous mortgage processing & underwriting training classes and have worked in the mortgage banking industry for 25+ years. If you're interested in becoming a writer for NAMP®, please email us at: firstname.lastname@example.org