The Spirit of Underwriting

Written By: Bonnie Wilt-Hild, Op-Ed Writer

I was in the kitchen this morning having a conversation with a coworker. We were reminiscing about the good old days of HUD field offices, case number assignment lines and of course processing and underwriting without the benefit of fax machines, AUS or even the internet for that matter. Those were the days when a final typed 1003 was exactly that, a document that you rolled into the typewriter and typed and carbon paper was an office necessity.

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During this conversation, we were discussing a HUD underwriter that we were both very familiar with who was all book and guideline. He could recite just about any mortgagee letter in its entirety, knew the guidelines verbatim, but as my coworker said, he just never seemed to embody the spirit of underwriting.

Underwriting in its truest form is more an art form or liberal science then an exact science and as such the most talented underwriters I have met seem to embody that spiritual liberalism that allows them to not only determine LTV and calculate ratio’s but to also look deeper into a case and determine the likely hood of repayment based on the borrowers financial character as well as the numbers. The spirit embodies not only that of a financial analyst/credit officer, but also that of a psychologist and more often than not, a social worker. It has far more to do with analyzing particular behaviors where money management is concerned while considering family characteristics then with calculator tapes, red pens and conditional commitments. Not that those elements aren’t critical, they just are not the only things an underwriter should considered when underwriting a case.

Let’s start with the financial psychologist in all of us. This element of an underwriters character allows us to determine if the borrowers overall financial behavior demonstrates an ability to maintain a monthly debt such as a mortgage payment for the long term. It requires that we analyze not only the borrower’s ratios and document evidence of sufficient funds to close but also the savings patterns, spending habits and their ability to absorb the increase in housing. We review the borrower’s credit history to determine the extent of the history, the repayment pattern and often times examine extenuating circumstances to determine if they were truly situations beyond the borrower’s control, which are unlikely to occur. This alone requires that we employ more than basic analytical sense and also brings out the social worker in us all.

Underwriting in general brings out the social worker in all of us. When you consider the socio-economic impact that we as underwriters have on our society, it’s actually overwhelming. Providing individuals and families the opportunity to not only own a house but to create a home is pretty big stuff. As a society, we raise our families in homes, it’s the American dream. It is where we raise our children, have dinner and spend time with family and friends. As individuals, our home may be the most valuable asset we ever own and from an economic standpoint, the business of mortgage lending and homeownership has a major impact on our economy. It keeps banks in business, Wall Street humming and all of us employed so that just like the people we serve, we too can maintain the American dream of raising our families in homes.

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This week when you are pounding on your calculator and working desperately to manage the number of files you have in the underwriting drawer or clear conditions on the cases that are piled on your desk, I hope you take a step back and remember the spirit that attracted you to your position in the first place and then let it flow. Enjoy and have a great week.

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".

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.