An underwriting manual override is a process in which a human loan underwriter takes a close look at a loan application to make a final decision different from the Automated Underwriting System (AUS) result. Automated systems—such as Fannie Mae’s Desktop Underwriter® (DU®) and Freddie Mac’s Loan Product Advisor® (LPA®)—analyze key financial metrics like credit scores, income, debts, and assets to quickly provide an eligibility recommendation. Although these systems are efficient, they have limitations in assessing unique borrower circumstances.
When the AUS issues a cautionary “Refer” or a denial, the application may be sent for manual underwriting, where a trained underwriter reviews the full financial picture. This human intervention allows assessment of “compensating factors”—positive aspects that balance out risk concerns—such as a substantial down payment, sizeable cash reserves, or stable self-employment income over time.
Manual overrides are common in scenarios like self-employed borrowers with fluctuating income, applicants with large but explained deposits, or borrowers with lower credit scores but strong financial reserves. The underwriter’s judgment, based on lender guidelines and experience, can approve loans that the automated system declined, or deny those the system approved if new risks surface.
It’s important to note that a manual override isn’t a guaranteed approval; it simply means a borrower’s unique financial story receives a thoughtful human review. Because manual underwriting involves detailed file analysis, it typically takes longer—often several days to weeks—compared to the minutes an automated system needs.
For borrowers, the best approach to increase chances of a successful manual override is to work closely with an experienced loan officer who can prepare your documents and highlight compensating factors effectively.
For more depth on automated systems and underwriting guidelines, check out our Automated Underwriting System (AUS) and Underwriting Guidelines entries.
References:
- Fannie Mae Desktop Underwriter and Freddie Mac Loan Product Advisor manuals
- Consumer Finance Protection Bureau’s Mortgage Underwriting Overview (https://www.consumerfinance.gov/ask-cfpb/what-is-automated-underwriting-en-1813/)
- FinHelp.io Glossary on Manual Underwriting Criteria and Compensating Assets for detailed underwriting concepts.
