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Mortgage Underwriting is the process of getting an approval
for a mortgage application based on verification of borrower's
financial information such as credit history and scores. There
are a number of rules pertaining to each mortgage program
such as the eligibility of borrower, the type of property
involved, the credit history and so on. It is also the process
of determining and controlling the risk of loss.
Underwriters can be an individual or a company undertaking
the responsibility for issuing a mortgage. The job of the
underwriter is to compare the loan application with the credit
profile and supporting documents provided by the borrower
with the requirements of the loan program offered by the lender.
The underwriter issues a formal loan approval on behalf of
the lender and also takes on the responsibility of understanding
and communicating investor guidelines in conjunction with
each transaction. The underwriter will make thorough investigation
based on all the documents and in the event that the borrower
has made any claim without providing supporting documents,
it is the responsibility of the underwriter to ask for clarification
documents. He or she will also check to see if there are any
inconsistencies in the application or information provided.
Also, it is their job to see whether the borrower will be
able to make timely payments based on the supporting documents
and other information. The underwriters often set the desirable
loan amount and determine the conditions under which the transaction
can close.
The underwriter makes sound decisions and ensures that all
the decisions meet the appropriate legal, secondary market
and bank policy requirements. The underwriting job requires
a lot of interaction with the customer through various communication
methods including personal interaction, telephonic conversations
or via email and fax. The underwriter must clearly explain
the underwriting policies and the procedures and techniques
used for analysis to the lender.
The underwriter must perform all duties in accordance with
the company’s, state and federal regulations. Also,
they must audit functions of loan origination, loan processing
and loan administration.
Most mortgage companies require underwriters with the following
qualifications:
- College degree or equivalent is preferred
- Excellent written and verbal communication skills
as well as interpersonal skills
- Thorough understanding of secondary market guidelines
(Fannie Mae/Freddie Mac)
- Proficient in the mortgage flow process
- Expertise in underwriting and superior mathematical
and analytical skills
- Skilled computer user, proficient in word processing
and spreadsheets
- Can work on Automated Underwriting Systems and other
related computer software
- Previous experience in mortgage lending industry is
preferred
Nowadays, a number of lenders use Automated Underwriting
System (AUS). The advantage of AUS is that there is a lot
lesser paperwork and time involved. The process of approving
or declining a loan application is made by the AUS and the
reviewing of supporting documentation and appraisal is done
by the underwriter. If there are discrepancies in the loan
application or a document is missing or inconsistent, then
the application will be kicked out by the system immediately
until the requirements are met or the application is resubmitted.
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