Where Have the Underwriters Gone

Written By: Bonnie Wilt-Hild

I was recently discussing an article published in Business Week with an FHA rooster appraiser who personally agreed that mortgage fraud was on the rise. He was concerned that many less than above board brokers and lenders refuse to use honest appraisers in lieu of appraisers that will get them the value they request regardless of what the property is actually worth. While trying to assure him that those appraisals simply do not make it through underwriting, that proper control measure were in place to catch the appraisals that to put in nicely were a stretch at best, I also disclosed to him that I was in fact a DE underwriter as well as a VA Lapp approved underwriter. Upon disclosing this to him he asked, “where have all of the underwriters gone anyway”. It seemed that to this appraiser the underwriters as he knew them were no where to be found.

I thought about his statement for some time and finally decided that to a small degree, I agreed with him. In this day of automated underwriting, decision credit scores and documentation checklist, it seems that very few individuals with the ability to decision the loan application choose to do so.

Choosing to just simply abide by the underwriting finds produced by the AUS or allowing the AVM to determine if the appraised value is acceptable has replaced traditional underwriting methods. Production numbers have replaced quality of asset and it seems that in most mortgage shops, be they lenders or brokers, the loan originators have more say than the underwriters. I myself have been in those situations where originators have pushed to have loans approved that were simply not approvable and from an underwriting standpoint, if you don’t have the support of management to simply say no, disaster will ultimately prevail.

Given the current economic situation, I think its time for the underwriter to take back the control and begin underwriting loans again. As FHA and VA are simply not matrix type products, underwriters need to evaluate the entire case from a credit and valuation standpoint. Fraud is rampant, appraisals are stretched and then there are those borrowers who just simply do not qualify.

We need to let the underwriters do what they do best and assess overall loan quality and compliance and then make the lending decisions. Originators can not assess cases from and underwriting standpoint otherwise they would be underwriters, not originators. AUS systems are great tools but often times do not take into consideration multiple other factors that could deem the case unacceptable from and underwriting standpoint. It is time for underwriters to step out from behind the AUS and stand firm to their underwriting decisions.

Ten years ago the underwriter was a respected and integral part of the mortgage lending industry. They were the guys and girls that financial institutions depended on to make sound lending decisions and ultimately insure that mortgages granted to borrowers would be both financially beneficial for the mortgage applicant as well as an acceptable risk for the mortgage lender and its time that we reassume this position. So I ask now, “if there are any underwriters out there, raise your hand………”

About The Author
Bonnie Wilt-Hild
- As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University (www.FHA-Classes.org) as well maintains a full-time mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans". If you're interested in becoming a writer for NAMP®, please email us at: contact@mortgageprocessor.org.

Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.