Manual underwriting: what happens after agency underwriting says Refer
Manual underwriting is when a human underwriter reviews the loan instead of, or after, an automated underwriting system. You still provide documents. A person compares them to guidelines and issues conditions. Manual is not a slur. It is slower, and two people can disagree.
When a file goes manual
The agency AUS refers or finds the file ineligible. The loan type has no agency AUS, which is most Non-QM and business purpose. A program uses a special rule, such as VA residual income or a thin credit file, that needs a person.
On agency loans, manual underwriting happens after agency underwriting says Refer
Agency files can still close. The underwriter uses compensating factors, residual income, or extra documentation. This page does not repeat those paths as legal advice.
Non-QM is manual from the start because no agency AUS takes the file
Bank statement, asset depletion, 1099, P&L, and most DSCR files never get an agency finding. The whole book is manual unless the lender encoded their own rules.
That is the cost problem. Every scenario waits on the person who knows the box. Turn times stretch. Two underwriters produce two incomes from the same statements. Capital markets gets a decision too late to hedge cleanly. Manual Non-QM files cost more and take longer than agency files, because there is no AUS.
What an AUS automates: the compare-file-to-guideline step, findings, and routine conditions. What stays human: exceptions, missing-doc judgment, and anything you refuse to write as a rule.
What is an automated underwriting system
How Non-QM lenders scale underwriting
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