Looking Ahead

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

As the wheels continue to turn in the mortgage industry so does documentation expectations where mortgage underwriting is concerned. Hopefully, we have all embraced due diligence in underwriting at this point because it of course pertains directly to how we as underwriters document certain circumstances surrounding credit quality of our borrowers which plays an important role in overall loan quality and ultimately extended performance of the asset and quite frankly I am not the only one that sees it this way.

Yesterday, we received some documentation guideline changes from a select few of our larger investors who seem to have begun implementing what would have previously been described as due diligence, into documentation standards in general underwriting. Some of these changes go as far to even eliminate what would have been considered normal documentation waivers found in AUS finding and now require the documentation as a standard.

For instance, one of my investor is now requiring explanations for inquiries less than 90 days on all government loans regarding of documentation waivers indicating otherwise which I agree with and have been asking for regardless of AUS waivers. Another change is requiring explanation from the borrower as including in qualifying undisclosed debt appearing on the borrowers credit report regardless of if it is a 30 day account. Again this makes sense because if the borrower has a demonstrated history of using this account and paying it in full on a monthly basis then it should be considered a reoccurring monthly obligation.

Finally, and this is the most impressive, I have an investor who will now make mandatory verifying the borrowers current monthly housing/rental history. Again, why AUS would turn this aspect of mortgage underwriting into something so insignificant that a documentation waiver could be extended is beyond me. In my opinion the borrower’s current housing expense history is one of the most significant indicators as to how the borrower will repay the proposed monthly housing expense.

There were other changes which where long overdue and from an underwriting standpoint will be much welcome as not only do they make perfect sense to analyze from an underwriting standpoint but they will also allow us underwriters to take off our boxing gloves when asking for additional documentation and just simply underwrite files prudently.

With this I will say that the New Year seems to looking up and underwriting standards seem to have found there way back from the obscure world of mortgage insanity which we have been operating in for the past 7 years bringing with them a feeling of good cheer among underwriters. Happy, Happy Holidays!

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)