Written By: Bonnie Wilt-Hild, Op-Ed Writer
Recently I have instructed a lot of students who were looking to make a jump from Conventional Underwriters to FHA Underwriters as well as other industry professionals such as real estate agents or title agents that were looking to break into the mortgage business altogether. More often than not, the big question was “Where is the best place to begin?” The answer to that question is relatively easy for those individuals who already have experience in mortgage credit analysis even if it is related to other mortgage products but for the individuals who have no real exposure to the mortgage process as a whole it’s a little more difficult.
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It's important to realize that there are several pieces to the mortgage lending puzzle and not even a college degree in business administration is going to teach to you to underwrite a loan let alone an FHA insured mortgage. It is something of an acquired skill that one achieves by doing. Understanding the guidelines and knowing maximum mortgage limits is not enough to actual assess the overall risk of each case. Complicate it a step further and realize that underwriting isn’t an exact science as there are no two cases alike so each case has to be assessed on its own merit.
Employing technology tools like Total Scorecard helps but quite frankly there are a lot of aspects to any mortgage file that the AUS can’t assess so it really is up to the underwriter to determine that this information is acceptable from a mortgage credit risk standpoint. We will leave the valuation piece of it alone. The bottom line is it takes time to learn the skills and practice to master them. Education and training are critical but practice makes perfect.
So back to the question, “where is the best place to begin?” I actually began as a loan closer working with 2nd mortgages, this after resigning from the police department. It was helpful considering the only real life work experience I had was working in an undercover capacity and not as a bank teller. I learned a lot of valid things including collateralization concepts as well as some of the credit documentation piece. Let’s just say I knew we needed paystubs and W-2 wage statements to determine if the borrower qualified. I could also look at an appraisal understand principals of fair market value and how it related to our exposure from a risk standpoint so all in all completing the function of closing prepared me for the processing piece.
I would say it was pretty impressive stuff for a girl who was more familiar with the term of “illegal book” than collateralization. Once I moved into the processor position, I was also able to originate because I began to understand the application process including what documentation I needed and how to read a credit report and appraisal. As I processed more and more applications, I actually developed a sense of what financial behavior had to be demonstrated by a borrower in order to determine them a satisfactory credit risk and what documentation could be used to determine this.
It didn’t take to much time before I found myself mumbling “I wouldn’t lend this guy .50 cents for a candy bar”, and my underwriter agreed. I will say that my prior police experience helped in the area of fraudulent documentation so even that was useful. Nothing like a trash bag of shredded paper and tape to teach you want documents need to be analyzed to make your case.
I was also fortunate enough to play around in the closing and servicing area which gave me the ability to see how the underwriting machine affected the closing and insuring piece. No better teacher than to try to get a loan insured just to find out you are missing a document that should have been obtained at an underwriting level. A little of that sort of thing goes a long way in making sure you collect the right things in the future. Being able to set interest rates helped me understand the pricing piece and ultimately become somewhat fiscally responsible where my borrowers were concerned not to mention sort out problems where funding issues where concerned.
Need FHA Training? CLICK HERE: http://www.FHA-Classes.org
All in all exposure to all areas where the mortgage lending process was concerned helped me acquire the skills needed to be a successful underwriter, understand financial behavior and learn to assess long term portfolio performance. To sum it up any skills acquired regardless of the first position you land as a mortgage professional is going to go a long way in determining what type of underwriter you will become which is real question. As far as the first question goes which was where is the best place to start, anywhere you can, the experience will serve you well. Good Luck!
About the Author
Bonnie Wilt-Hild - As an op-ed writer, Bonnie has held many mortgage underwriting positions, including 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".
