Mortgage tech company Candor Technology expand the Loan Engineering System (LES) to include Federal Housing Administration (FHA) loan. The company now fully handles the underwriting decisions for FHA loans – minus the collateral – and offers a guarantee on the income calculation and written off terms of the FHA subsidized loans.
“No other automated underwriting technology helps lenders make decisions on FHA loans like ours,” said Mark Hinshaw, CEO of Candor Technology. “We are very happy to lead with this high-quality technology. Our LES leverages the power of AI, allowing originators to make faster, more confident decisions, ultimately improving the borrower experience. “
Hinshaw said LES’ technology includes loan origination software, which enables them to calculate income, assets and other eligibility criteria within FHA guidelines. The system generates and clears “flexible, loan-specific terms” and is backed by a warranty from a AAA-rated insurer for up to 60 months after closing.
FHA loans can be fully underwritten in 90 seconds, according to Candor.
In interview no HousingWireHinshaw said the product has gone through extensive testing. “We’ve been in beta with FHA for several months at five different lenders. They shoot holes in it and send us bugs back, then we write the code until we get it right. What we have now is a well-tested solution for underwriting those areas of an FHA loan – income, credit and assets. “
Clients are using technology to create an initial scenario at the point of sale and write it down later in the fulfillment phase, said Sara Knochel, Candor’s chief operating officer. After the loan officer receives a completed application from the borrower, they will process the loan and apply through the automated underwriting system (AUS). After that, it goes through Candor, which will set the status of the loan and tell the LO what the borrower needs while spitting out a roadmap for processing. As the LO receives the documents back from the borrower, it goes through the Candor process and begins clearing the conditions.
“Within seconds, the borrower knows if he is eligible and what he has to provide, and after a few minutes, after analyzing the documents they provide, the LO knows the income and can issue a pre-approval letter to the borrower,” said Knochel.
Candor executives say they have underwritten more than 500,000 conventional loans to date, noting that there are no repurchase claims. Fannie Mae and Freddie Mac won. The system has coded guidelines and does not deviate from them or use machine learning that could create discrimination or bias issues, Hinshaw said.
Candor, which went bankrupt more than a year ago, has focused more on meeting customers to meet their core needs, said Sara Nakae, senior vice president of sales and marketing.
“We meet with lenders in a very customer-centric way, we do a deep dive, see what they need, then take that information back and create a road map to equip customers with what they need to be successful,” Nakae said.
Hinshaw said they have been asked by customers to add fraud detection capabilities to W2 pay stubs and bank statements. They are looking to roll that out in the fourth quarter of 2024, and are devoting resources to new Encompass hotspots in the future.
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