Custom DU® - A Web Based Business User Driven Automated Underwriting System

ic with frequent volume fluctuations, shifting investor requirements, and evolving regulatory and compliance standards, not to mention ever-changing customer demands. In the mid-1990s, Fannie Mae introduced Desktop Underwriter (DU), an automated underwriting system (AUS) that significantly improved the underwriting process (McDonald et al. 1997). DU and other automated underwriting systems have created enormous efficiencies in the mortgage origination process, and most lenders now evaluate conforming mortgage applications using such systems. AUSs have expanded the number of loans that lenders can make by significantly reducing the time and cost of originating a loan and allowing lenders to tailor loan terms based on an individual borrower’s risk profile. The Internet and other technology advances make it a necessity that mortgage operations run efficiently and smoothly. The Internet era is changing the expectations of customers across all financial services including the mortgage industry (Pafenberg 2004). Consumers want personalized services and solutions for their individual financial situation, not off-the-shelf, one-size-fits-all financial products. Mortgage lenders are required to satisfy consumer expectations while still adapting a technology infrastructure that has been primarily designed to process transactions and to meet the needs of investors. The Internet provides the perfect communications conduit for information, decisions, transactions, and procedures. Building on the success of AUSs such as DU, lenders have started looking at ways to extend the efficiencies of technology to other parts of the mortgage process. Fannie Mae developed Custom DU as a comprehensive system that allows lenders to create and publish their own customized underwriting rules, investor variances, and individual loan product messages. Custom DU provides lenders with the ability to leverage the power of DU for their other product lines, gaining operating efficiencies that give them more control of their pipelines. Custom DU enhances the process by allowing additional rules that lenders can apply to their mortgage production. An example is portfolio products. Custom DU allows lenders to build proprietary underwriting rules for their portfolio products and minimize manual intervention required to underwrite the loan. This enhanced benefit also applies to different products and different channels as explained in the following sections. Custom DU also allows lenders to customize transaction output, the underwriting findings report (see the sample underwriting findings report sidebar). The findings report includes data supporting the underwriting decision from the system in the form of customized, transaction-specific messages and underwriting calculations. The lender can choose to leverage existing DU messages or develop proprietary messages and conditions. Articles