What is the requirement if disputed accounts exist on a credit report?

When disputed accounts exist on a credit report, the requirement to downgrade to manual underwriting unless specific conditions are met is essential for ensuring that the borrower’s creditworthiness is accurately assessed. Manual underwriting allows for a more detailed analysis of the borrower’s overall financial situation and the context of the disputed accounts, rather than relying solely on automated systems that may not account for nuances in the borrower’s credit history.

Manual underwriting typically involves a thorough review by an underwriter who can evaluate the borrower’s ability to repay the loan and consider the implications of the dispute on the borrower’s creditworthiness. In some situations, if the disputed account can be resolved or if the borrower can provide documentation supporting their position regarding the disputed account, the manual underwriter may still move forward with the loan process.

The other choices do not align with best practices for handling situations with disputed accounts. Approving a loan without conditions or processing it normally could lead to significant risk, as disputed accounts can indicate underlying financial issues that need to be addressed. Immediate rejection without further investigation does not allow the opportunity for understanding the borrower's full financial picture and misses the chance for resolution of disputes.