A mortgage team asks a loan file reviewer about automated underwriting systems during an advertising approval. Which answer should guide the file?
Correct Answer
B) Use manual review when the AUS finding requires it
Why this is correct: Automated Underwriting Systems (AUS) are tools, not final arbiters. Their findings, such as a 'Refer' or 'Caution,' often require additional manual underwriting review to assess compensating factors or verify information. Using manual review when the AUS finding requires it is a standard and compliant practice to ensure a thorough and accurate credit decision. Why the other choices are wrong: "Delete adverse file facts before resubmitting to improve the AUS result" is wrong because this is data manipulation and fraud; all material facts must be accurately submitted. "Apply AUS findings from another borrower or property to the current file" is wrong because AUS findings are specific to the unique application data; applying another's findings is inaccurate and non-compliant. "Override an AUS caution finding without documenting compensating factors" is wrong because overriding a system finding requires justification and documentation of the factors supporting the override to demonstrate a reasonable credit decision. Exam tip: An AUS finding is a recommendation. The human underwriter is always responsible for the final decision and must document any deviations from the AUS recommendation.
Why This Is the Correct Answer
The correct response is "Use manual review when the AUS finding requires it" because AUS findings guide documentation and eligibility but still require review of conditions and data integrity.
Why the Other Options Are Wrong
Option A: Delete adverse file facts before resubmitting to improve the AUS result.
This choice is not the best answer because it applies the wrong file step for AUS findings and conditions; the governing rule is tested by the correct option.
Option C: Apply AUS findings from another borrower or property to the current file.
This choice is not the best answer because it applies the wrong file step for AUS findings and conditions; the governing rule is tested by the correct option.
Option D: Override an AUS caution finding without documenting compensating factors.
This choice is a tempting shortcut, but it conflicts with AUS findings and conditions because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Memory Technique
automated underwriting systems: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For AUS findings and conditions questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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