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Manual underwriting refers to the hands-on underwriting of loans such as mortgages when the automated underwriting system (AUS) is unable to come up with a conclusive outcome for an applicant.
This can sometimes be due to system error, truncated information, special know your customer (KYC) requirements, etc.
Manual underwriting can be a tedious and meticulous task. And only qualified a credit officer with good knowledge of GSE criteria.
In other words, it’s like the cash register at a mall stops working and staff have to accept credit card payments by manual swiping imprinter and recording.
Manual underwriting went out of fashion before 2008. But due to the AUS approving home loans left right and center, it has become trendy again.
Saying that, most underwriting are still done by AUS these days.
However, a hands-on component might still be part of the whole underwriting process.