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Automated Underwriting System (AUS) in nCino Mortgage

Updated

Description:

Automated Underwriting Systems (AUS) are sophisticated software platforms that evaluate mortgage loan applications and provide underwriting recommendations in seconds. nCino Mortgage integrates with the two primary AUS platforms - Desktop Underwriter (DU) from Fannie Mae and Loan Product Advisor (LPA) from Freddie Mac. These systems analyze borrower data, credit profiles, and loan characteristics to determine loan eligibility and provide specific documentation requirements. This guide explains how to use AUS within nCino Mortgage, understand AUS findings, and follow best practices for submission.

Steps to Resolve:

Understanding AUS Platforms:

Desktop Underwriter (DU) - Fannie Mae:

Desktop Underwriter is Fannie Mae's proprietary automated underwriting system and is the most widely used AUS in the mortgage industry. DU evaluates loans against Fannie Mae's selling guidelines.

Key capabilities include:

  • Real-time credit analysis and risk assessment
  • Integrated asset and income validation
  • Property valuation integration
  • Automated documentation requirements

Loan Product Advisor (LPA) - Freddie Mac:

LPA is Freddie Mac's automated underwriting system that assesses loan applications against Freddie Mac's purchase requirements.

Key capabilities include:

  • Comprehensive credit risk assessment
  • Collateral and title analysis
  • Streamlined documentation paths
  • Quality control tools

How AUS Works in nCino Mortgage:

The automated underwriting process follows these steps:

  1. Data Input: Loan officer or borrower enters borrower information into the LO1003 or Borrower 1003, including income, assets, credit history, employment, and property details.
  2. Credit Pull: The AUS retrieves credit reports that have been pulled through nCino's credit tool and analyzes credit scores, payment history, and outstanding debts.
  3. Fees: If available, AUS pulls in fees either from a 3rd party provider (Lodestar or Smart Fees), or from the loan fees template in settings (for lender fees), and runs them through the service.
  4. Risk Assessment: The system evaluates multiple risk factors using proprietary algorithms from each provider, including:
    • Debt-to-income (DTI) ratios
    • Loan-to-value (LTV) ratios
    • Credit history
    • Reserves
    • Employment stability
  5. Findings Generation: AUS returns one of several possible findings with specific documentation requirements. These can be returned separately or as part of a Dual AUS run that shows them side by side on the recommendations screen in nCino Mortgage.

Web:

Running AUS in nCino Mortgage:

  1. Ensure Prerequisites are Complete:
    • Credit must be pulled (required before running AUS)
    • Verifications should be ordered (optional but highly recommended)
    • Fee engines should be run (optional)
  2. Access AUS:
    • If you wish to submit AUS runs on submitted loan applications, the Auto Import Delay setting found on your LOS Loan Import tile must be enabled for your company. This setting will affect all loan apps submitted for all users in your company, so if you have auto import of loan apps enabled, this setting will delay the import of these loan apps for the time period you specify for your company. If a loan app needs to be imported to your LOS during this delay import time, please go into the LO1003 and resubmit the 1003 and this will override this setting and allow the loan app to import into your LOS.
    • AUS can be run from two locations:
      • From the LO1003 by clicking the AUS option
      • From the Services tab on a loan
    • You can order AUS as:
      • A single service (DU only or LPA only)
      • A Dual Run (both DU and LPA simultaneously)
  3. Check Required Fields:
    • Click on the AUS pill in the LO1003 to view all required fields
    • Note: Required fields change by loan type, and some questions are conditionally required (meaning if answered a certain way, additional fields may become required)
    • Ensure all required data is entered accurately before running AUS
  4. Submit AUS:
    • Select whether to run DU, LPA, or Dual AUS
    • Click "Run AUS" or "Submit" to process the underwriting
    • The system will analyze the loan data and return findings within seconds
  5. Review AUS Findings:
    • AUS findings can be viewed in two ways:
      • AUS findings reports provided directly by DU or LPA
      • AUS recommendations screen in nCino Mortgage, which shows individual service recommendations or a comparative dual recommendations view
    • Review the findings to understand the underwriting decision and documentation requirements
  6. Re-issue Findings to Encompass (if applicable):
    • If AUS re-submit is enabled, findings can be re-issued to appear in the UW section in Encompass
    • This keeps your LOS updated with the latest AUS results

Important Note About Two-Way Sync:

  • If Two-Way Sync is enabled: AUS can be run on updated loans after they've been imported to Encompass. Changes made in the LO1003 will sync to Encompass, and you can run AUS on the updated data.
  • If Two-Way Sync is NOT enabled: LO1003 editing will be disabled once the loan application is imported to Encompass and becomes a "loan" object in nCino. AUS can still be run, but because no data will be updated on the nCino side, the AUS results won't change.

Understanding AUS Findings:

Desktop Underwriter (DU) Findings:

  1. Approve/Eligible:
    • The loan meets Fannie Mae guidelines
    • Proceed with documentation and verification per AUS requirements
    • Specific documentation waivers may apply
  2. Refer with Caution:
    • Additional review required by underwriter
    • May not meet standard automated approval criteria
    • Manual underwriting may be needed
  3. Refer:
    • Does not meet automated approval standards
    • Requires manual underwriting
    • May still be eligible with compensating factors
  4. Ineligible:
    • Does not meet Fannie Mae guidelines
    • Cannot be sold to Fannie Mae without modifications

Loan Product Advisor (LPA) Findings:

  1. Accept:
    • Loan meets Freddie Mac requirements
    • Proceed with specified documentation
  2. Accept with Caution:
    • Requires additional underwriter review
    • Additional documentation may be needed
  3. Out of Scope:
    • Falls outside LPA's automated decision parameters
    • Requires manual underwriting

Understanding Documentation Requirements:

AUS platforms provide various levels of documentation requirements based on risk assessment:

Standard Documentation:

  • Full income, employment, and asset documentation required

Reduced Documentation: The AUS may waive certain verifications such as:

  • Income verification (with strong credit and reserves)
  • Employment verification (with established employment history)
  • Asset verification (with sufficient compensating factors)

Documentation Waivers: Specific documents that may be waived include:

  • Paystubs (income verification waiver)
  • W-2s or tax returns
  • VOE (verification of employment)
  • Bank statements (asset verification waiver)

Key Factors Evaluated by AUS:

Credit Profile:

  • Credit scores from all three bureaus
  • Payment history and derogatory items
  • Credit utilization
  • Inquiries and new accounts
  • Public records

Income and Employment:

  • Stability of employment
  • Income consistency and trends
  • Debt-to-income ratio (DTI)
  • Income documentation type

Assets and Reserves:

  • Down payment source
  • Cash reserves (months of PITI - Principal, Interest, Taxes, Insurance)
  • Asset seasoning and documentation
  • Gift funds or down payment assistance

Property and Collateral:

  • Property type and occupancy
  • Loan-to-value (LTV) ratio
  • Appraised value vs. purchase price
  • Location and market conditions

Loan Characteristics:

  • Loan purpose (purchase, refinance, cash-out)
  • Loan type (conventional, FHA, VA, USDA)
  • Loan term and amortization
  • Subordinate financing

Best Practices for AUS Submission:

  1. Complete all required fields in the LO1003 before running AUS. Use the AUS pill to identify which fields are required.
  2. Pull credit first - Credit is required before AUS can run successfully.
  3. Order verifications (VOA, VOI, VOE) before running AUS when possible. This provides AUS with more complete data for better findings.
  4. Run fee engines (if available) to include closing costs in the AUS evaluation.
  5. Review data accuracy - Ensure all borrower information is entered correctly to avoid inaccurate findings.
  6. Use Dual AUS runs when applicable to compare Fannie Mae and Freddie Mac findings side by side.
  7. Enable Two-Way Sync if you need the ability to run AUS on loans after they've been imported to Encompass.

Solution:

After running AUS through nCino Mortgage, you will receive automated underwriting findings from Desktop Underwriter (DU) and/or Loan Product Advisor (LPA) that provide clear recommendations on loan eligibility and required documentation. The AUS findings indicate whether the loan is approved, requires additional review, or needs manual underwriting. You can view findings directly in the AUS reports or through the recommendations screen in nCino Mortgage, which provides a side-by-side comparison when running Dual AUS. By following best practices - such as pulling credit first, completing all required fields, and ordering verifications before submission - you'll receive the most accurate findings and potentially qualify for documentation waivers that streamline the loan process. If Two-Way Sync is enabled, you can continue to run AUS on loans even after they've been imported to Encompass, allowing you to re-evaluate the loan as borrower circumstances change or additional documentation is provided.

Frequently Asked Questions:

Q: How can I get AUS setup for my company in nCino Mortgage? A: Please contact support through our support form and a support agent can help get AUS setup for your company.

Q: Can AUS be run after a loan is imported to Encompass? A: Yes, if Two-Way Sync functionality is enabled, AUS can be run on submitted loans that have been imported to Encompass.

Q: What happens if I run AUS without pulling credit first? A: Credit is a required prerequisite for AUS. You must pull credit through nCino's credit tool before the AUS can successfully evaluate the loan.

Q: What's the difference between running DU, LPA, or Dual AUS? A: Running DU evaluates the loan against Fannie Mae guidelines, LPA evaluates against Freddie Mac guidelines, and Dual AUS runs both simultaneously and shows the findings side by side for comparison.

Q: Why are my AUS findings not changing after I update the loan? A: If Two-Way Sync is not enabled, the LO1003 editing will be disabled after import to Encompass. While AUS can still be run, the data won't be updated on the nCino side, so the results won't reflect any changes.

Q: What does it mean when AUS provides documentation waivers? A: Documentation waivers mean the AUS has determined that certain verifications (such as income, employment, or asset documentation) are not required based on the strength of the borrower's overall profile and compensating factors.

 

Published: 05/15/2026                                            Last Update: 05/20/2026