Automated Underwriting software was created by a former NASA rocket scientist, Edward Jones, in the 1990’s. Jones developed his niche products and sold them to the sub-prime mortgage market making millions for himself and billions for the industry. This technology fell unfettered into the hands of lenders such as Countrywide, who allowed computer approved loans to make lending decisions. The rest, as they say, is history.
Interest-only and no-down-payment loans quickly became the norm on Main Street. AU was hailed by mortgage brokers as a quick and dirty way to process loans that should have been denied. From the vantage point of the post mortgage meltdown of 2008, the extensive misuse of AU by the mortgage industry makes the good old boys network look highly ethical. Jones, most likely, has retired to some other banana republic.
Browning, L. (2007). The subprime loan machine. Computers in Society, 14, 16-17. From The New York Times, (2007, March 23) pp. C1–C4.
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