GUS — USDA’s New Tool for Determining Borrower Creditworthiness
May 31, 2016
For all those looking to own their land and do a construction of their home themselves, USDA loans has been a wonderful gift. While on the one hand there are only few loans that allow you to realize this dream, on the other, these loans are hard to get. Compared to other similar loans, a USDA loan can be processed in a simple and straightforward manner. However, the ease of the process exposes USDA loans to risks such as inaccurate assessment of loans. In a bid to enhance the agency’s ability to assess and manage risk, the USDA has developed an automated Guaranteed Underwriting System (GUS) for its single-family loan program. This aside, GUS is expected to lower processing costs and shorten turnaround times for USDA loans.
How GUS Helps
GUS assesses the creditworthiness of a borrower by evaluating the income, credit history, cash reserves and other determinants of creditworthiness. An approved creditworthiness gets reflected as an “Accept” from the system. The other risk classification include “Refer” or “Refer with Caution.” By leveraging GUS, lenders and brokers can take USDA’s Single Family Housing Loan Guarantee Program to rural locations.
How GUS Works
USDA’s GUS is built along the lines of the FHA’s T.O.T.A.L. (Technology Open to Approved Lenders) mortgage scorecard, which matches inputs with loan program requirements, to determine borrower eligibility. A broker or lender just needs to gather the required details from the borrower over the phone and feed the information into the system. The automated system evaluates the data and issues an underwriting recommendation in real time. If a borrower does not receive an initial “Accept”, the system will inform the borrower on the reasons for refusal. Armed with the knowledge of things to correct, the application can be resubmitted in the system.
Benefits to Lenders and Brokers
Lenders and brokers can utilize GUS to better understand USDA loan qualifying for the Single Family Housing Guaranteed Loan Program (SFHGLP). A proper understanding of borrower eligibility and the risks involved can help them streamline the underwriting process, reduce paperwork burden and make the decision-making process far more consistent.
Expert Mortgage Assistance has rich experience in transacting USDA loan processes and can help lenders utilize the GUS system to maximize benefits. Get in touch with us for an expert opinion.