Next on the roadmap: Candor automates FHA loan underwriting
Mortgage technology company Candid technology has expanded its Loan Engineering System (LES) with Federal Housing Administration (FHA) loans. The company now fully automates underwriting decisions for FHA loans – minus collateral – and also offers a guarantee on income calculations and approved terms for funded FHA loans.
“There is no other automated underwriting technology that helps lenders make FHA loan decisions like ours,” said Mark Hinshaw, CEO of Candor Technology. “We are pleased to be leading the way with this groundbreaking technology. Our LES leverages the power of AI, allowing originators to make faster, more confident decisions, ultimately improving the lending experience.”
Hinshaw said the LES technology integrates with loan origination software to calculate income, assets and other qualifying criteria within FHA guidelines. The system generates and settles “dynamic, loan-specific terms” and is backed by a AAA-rated insurer guarantee for 60 months after closing.
According to Candor, FHA loans can be fully underwritten in as little as 90 seconds.
In an interview with HousingWireHinshaw said the product has been extensively tested. “We have been in beta with FHA for several months with five different lenders. They blow holes with it and hit us back with flaws, and then we code until we get it right. What we have now is an extremely well-vetted solution for insuring those areas of FHA loans: income, credit and assets.
Customers use the technology for initial preparation at the point of sale and for adoption later in the fulfillment phase, said Sara Knochel, Candor’s chief operating officer. After the loan officer receives a completed application from a borrower, they initiate a loan and place the application through the Automated Underwriting System (AUS). Then it goes through Candor, which conditions the loan and tells the LO what the borrower needs while spitting out a processing roadmap. As the LO gets the documents back from the borrower, he goes through Candor’s system and begins to settle the terms.
“Within seconds, the borrower knows if he qualifies and what he needs to provide, and within minutes, after we analyze the documents he has provided, the LO knows his income and can issue a pre-approval letter to the borrower ,” said Knochel.
Candid executives said they have underwritten more than 500,000 conventional conforming loans to date, noting that there have been no repurchase claims from Fannie Mae and Freddie Mac have been successful. The system is coded according to the guidelines and does not deviate from them or use machine learning that could potentially lead to discrimination or bias, Hinshaw said.
Candor, which implemented layoffs more than a year ago, has focused heavily on meeting with customers to meet their critical needs, said Sara Nakae, senior vice president of sales and marketing.
“We meet with lenders in a way that is very customer-centric, where we dive deep, see what they need, and we take that information back and develop a roadmap around it to provide customers with what they need to be successful,” Nakae said.
Hinshaw said customers have asked them to add fraud detection to W2 pay stubs and bank statements. They want to roll that out in the fourth quarter of 2024 and are also dedicating resources to new web interfaces for Encompass in the coming quarters.
