Mortgage tech firm Candor Technology has expanded its Loan Engineering System (LES) to include Federal Housing Administration (FHA) loans. The company now fully automates underwriting decisions for FHA loans — minus collateral – and also offers a warranty on income calculations and cleared conditions for funded FHA loans.
“There is no other automated underwriting technology that helps lenders make decisions on FHA loans like ours,” said Mark Hinshaw, CEO of Candor Technology. “We’re excited to lead the way with this groundbreaking technology. Our LES capitalizes on the power of AI, enabling originators to make faster, more confident decisions, ultimately enhancing the borrower experience.”
Hinshaw said the LES technology integrates with loan origination software, enabling it to calculate income, assets and other qualifying criteria within FHA guidelines. The system generates and clears “dynamic, loan-specific conditions” and is backed by a warranty from a AAA-rated insurer for up to 60-months post-closing.
FHA loans can be fully underwritten in as little as 90 seconds, according to Candor.
In an interview with HousingWire, Hinshaw said the product has gone through extensive testing. “We’ve been in beta with FHA for several months across five different lenders. They shoot holes with it and hit us back with defects, and then we code until we get it right. What we have now today is an extremely well-vetted solution for underwriting those areas of FHA loan — income, credit and asset.“
Clients use the technology for an initial conditioning at the point of sale and an underwrite later in the fulfillment stage, said Sara Knochel, chief operating officer of Candor. After the loan officer receives a completed application from a borrower, they’ll run credit and put the application through the automated underwriting system (AUS). Afterward, it goes through Candor, which will condition the loan and tell the LO what the borrower needs while spitting out a processing road map. As the LO gets the documents back from the borrower, it goes through Candor’s system and begins clearing conditions.
“In a matter of seconds, the borrower knows if they’re eligible and what they have to provide, and then in a matter of minutes, after we analyze the documents they provide, the LO knows their income and can issue a preapproval letter to the borrower,” Knochel said.
Candor executives said they’ve underwritten more than 500,000 conventional conforming loans to date, noting that zero buyback claims by Fannie Mae and Freddie Mac have been successful. The system is coded to the guidelines and doesn’t deviate from them or use machine learning that would potentially create discrimination or bias issues, Hinshaw said.
Candor, which conducted layoffs more than a year ago, has been heavily focused on meeting with clients to execute on their critical needs, said Sara Nakae, senior vice president of sales and marketing.
“We meet with lenders in a way that is very client-focused, doing deep dives, seeing what they need, and we take that information back and we develop a road map around it to arm clients with what they need to be successful,” Nakae said.
Hinshaw said they’ve been asked by clients to add a fraud detection capability to W2 pay stubs and bank statements. They’re looking to roll that out in fourth-quarter 2024, and are also devoting resources to new web interfaces for Encompass in the coming quarters.