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Unformatted text preview: quires that the applicant's credit be approved and that the loan's collateral be appraised. But now these tasks can be accomplished in seconds and minutes rather than hours and days. In other words, progress is measured in terms of speed and efficiency. In 1995 FNMA offered its automated underwriting system to its loan servicers. FNMA’s system followed closely behind FHLMC's loan preparation system; however, FNMA offers two levels of programming, one for lender servicers and the other for independent mortgage broker–agents, called the desktop originator–desktop underwriter. Lenders access FNMA's sophisticated loan analysis system through software purchased from FNMA. Estimated loan approval time runs from 60 seconds to 30 minutes, but the
14-34 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 14: THE LOAN PROCESSING
originator must fax verification information–including pay stubs, two years of W2 forms and three monthly bank statements. Included in the process is credit scoring. The applicant's score is based primarily on data in one or more of the national repository files maintained by Experian (TRW), Equifax or Trans–union. Some factors included in scoring models, include behavioral data based on number of jobs held, length of time in present home, marital status, etc. The scores on the FICO test (named after Fair, Isaac & Co., the San Rafael, California– based firm that created the test) run from 400 to 900, the higher the score, the better the credit. The scores on what is called the MDS test run from zero to 1,300, with the lower score indicating better credit. Lenders may order either or both scores electronically at relatively low cost from credit repositories or bureaus. FICO scores are known as Equifax Beaconsm, Trans Union Empiraca and TRW/FICO. MDS scores are known as Equifax Delinquency Alert System, Trans Union Delphism and TRW/MDS. Potential misuse of credit scoring has prompted the following three rules on their use: 1. 2. 3. Never automatically disqualify anybody due to...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10