Automated Underwriting System (AUS) Requirements

Now that it is 2018, financial institutions will have to report the name of the Automated Underwriting System (AUS) and the results that were generated as part of their HMDA data. This data point allows a financial institution to not only use the already well established AUSs, but to also report if they used one that they developed themselves. If this is the case, this system must meet all of the elements of the AUS definition. According to the CFPB’s Small Entity Compliance Guide, an AUS is: i) developed by a securitizer, Federal government insurer, or Federal government guarantor of Closed-End Mortgage Loans or Open-End Lines of Credit; and ii) provides results that address both the applicant’s credit risk and whether the loan is eligible to be originated, purchased, insured, or guaranteed by the securitizer.

It is important to note that this data point is required to be reported if an AUS was used to evaluate the loan. The intention of the financial institution, whether to sell or to keep it as part of their portfolio, will not affect this reporting requirement. That being said, using an AUS is not a requirement for generating a loan. If one was not used in evaluating the application, then this data point can be reported as “not applicable” on your HMDA LAR. The other two circumstances in which “not applicable” can be reported is if you are reporting on a purchased loan or if the applicants are not natural persons.


For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.