The Traditional Approach to Loan Underwriting Has Virtually Been Replaced

Multiple Choice

The traditional approach to loan underwriting has virtually been replaced by an automated underwriting process that involves a statistically derived equation to determine the level of default risk associated with a loan application. All of the following statements regarding the automated underwriting process are true EXCEPT:

A) The marginal cost per loan underwritten using the automated process is greater than the case of traditional underwriting.
B) The time taken to approve a loan using the automated process is considerably shorter than the case of traditional underwriting
C) The success in identifying risky loans is higher using the automated process than is the case with traditional underwriting
D) Automated underwriting has made home ownership available to households for whom it previously was inaccessible.