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What is a guideline exception in mortgage underwriting?
A guideline exception is a request to approve a mortgage scenario that falls outside one or more of a program's standard underwriting or eligibility guidelines. It's reviewed individually, based on the overall strength of the file and the specifics of the loan. An exception is not automatic and does not guarantee approval.
Guidelines are written for the typical file, and some loans miss on a single point. An exception request asks the lender to look at that point in the context of everything else in the file.
An exception is different from a compensating factor. A compensating factor is a strength considered within the guidelines; an exception is a decision to go outside one, and the lender may approve, counter or decline.
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