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FHA unveils Automated Underwriting System as part of modernization initiative

Intended for single-family forward mortgages, the tech will integrate with FHA's Catalyst

The Federal Housing Administration announced on Wednesday the launch of its first automated underwriting system that will allow lenders to submit loan application data electronically for single family forward mortgages from their loan origination systems to FHA for mortgage insurance eligibility.

The AUS is built upon FHA’s Catalyst technology platform – a modernization initiative the company says will build trust through “reliable and accurate data, facilitating modern systems for the FHA program participant community.” Previously, the FHA integrated its Electronic Appraisal Delivery module to the Catalyst platform for lenders to submit, track and manage single-family property appraisals.

Some key features include feedback certificates that provide actionable information for lenders that corresponds with FHA policies in the Single-Family Housing Policy Handbook and data synchronization between LOS and FHA Catalyst with the use of Application Programming Interface (API) technology.

The new module also offers integrated submission of credit report data reissuances, which FHA says will eliminate the need for lenders to use a third-party routing system.

“Rather than going through 10 or 15 different systems to go through that transaction, this capability will actually allow them to have one location to access all the information they will need,” said David Chow, the Department of Housing and Urban Development’s chief information officer.

A mortgagee will complete a loan application in the LOS and submit it to the AUS, which will then obtain credit report information for the mortgagee’s credit vendor. After the ULAD and credit report information is obtained, the AUS will score the application using the FHA TOTAL mortgage scorecard. Once scored, the mortgagee will receive a scoring decision and feedback certificate.

“It is modernization of the entire process. Modernization means fewer hassles for lenders and potential homeowners and it translates into more efficiency in the origination process,” said Dana Wade, FHA commissioner. “We are looking to build upon that to have a robust ability to analyze data so that FHA can make better decisions for the taxpayer, for the industry and the stability of the marketplace and ultimately for homebuyers.”

In September, Pyramid Systems, a technology solutions provider for federal agencies, announced it was awarded a Salesforce Refactoring and Implementation Support Services (SRISS) contract to modernize the FHA loan system. According to the release, the two-year contract is worth $42 million.

The FHA said its new AUS will be available in FHA Catalyst for single family forward mortgage programs on or after Oct. 30, 2020 and will not be a required replacement of other automated underwriting systems that accommodate FHA-insured mortgages.

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