Colleen M. Olivas, Underwriter Roles and Responsibilities
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Colleen M. Olivas, Underwriter Roles and Responsibilities

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Colleen M. Olivas, Discusses Professional Underwriter Roles and Responsibilities

Colleen M. Olivas, Discusses Professional Underwriter Roles and Responsibilities

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Colleen M. Olivas, Underwriter Roles and Responsibilities Colleen M. Olivas, Underwriter Roles and Responsibilities Presentation Transcript

  • Part 1 - Responsibilities and Roles as an Underwriter…an Overview
  • As our society has evolved culturally,ethnically, and demographically, so has theapproach to qualifying mortgage applicants.
  • Secondary market guidelines still providestructure (and with good reason), but todaysunderwriting flexibilities allow an underwriterto review each situation individually.In this way, the underwriter works as a teamwith the loan officer.
  • The goal of this mini-course is not totrain the reader to underwrite anyparticular program-- as specificguidelines change regularly.I simply want to present fundamentalunderwriting concepts.
  • Many lenders use automated underwritingsystems (AUS) in their underwriting decisionmaking processes. An AUS, such as FannieMae’s Desktop Underwriter or Freddie Mac’sLoan Prospector is a computer softwareprogram that empirically assesses individualand overall risk of an application.
  • Federal Regulations make it clear thatmortgage lenders have a responsibility toattempt to satisfy mortgage loan requests aslong as the risk is analyzed fully and deemedacceptable.
  • The desire to make loans must be balanced bya mortgage lender’s fiduciary responsibility toprotect whoever provides funds for thoseloans: depositors, shareholders, governmentagencies or secondary market investors.
  • All lenders, servicers, investors and insurersshare the danger that even properlyunderwritten mortgages may becomedelinquent.
  • Mortgage Brokers/Bankers have no margin forerror. Every loan they underwrite must be soldto a permanent investor. If a poorlyunderwritten loan is not secondary marketableat a reasonable price, it may result inconsiderable loss to a mortgage broker/banker.
  • The Underwriting mechanism has significantand lasting financial effects. Therefore it isimperative to adopt prudent guidelines,maintain an objective auditing structure,develop and maintain professionalunderwriting expertise and reviewunderwriting performance through qualitycontrol.
  • All mortgage loans involve the risk of possiblefinancial loss. The underwriting analysisquantifies the risk factors present andmeasures these against other strengths in thefile to determine whether the strengths offsetthe weaknesses.
  • Risk is never completely eliminated…it is onlymanaged.
  • Credit – based on the credit history of theapplicantCollateral – the condition and value of theproperty being securedDefault – debt repaymentInterest rate – changes in market interest ratesvs. loan interest rates….to name a few.
  • It is important to stress that only underwritingguidelines exist, not specific, precise formulasto apply to every applicant.
  • Although today’s underwriter has access tosophisticated automated underwriting systems(AUS), credit scores and mortgage scores, thetime-honored industry saying still rings true:“underwriting is an art, not a science.”
  • A successful underwriter’s greatest asset is notthese powerful analytic tools, but the abilityto apply common sense and creativity to themany situations that arise when qualifyingmortgage applicants.