The Truth about Underwriters

Written By: Bonnie Wilt-Hild

A few days ago a friend and I were laughing over the fact that most people, including mortgage industry professionals, wonder if underwriters really exist. I myself have had staff from various brokers offices (which I do visit from time to time) say to me, “We have heard about underwriters but have never really seen one.” Well in an attempt to set the record straight I am here to tell you that we really do exist and contrary to public opinion (and I read a lot of it when researching this article), we are not sasquatch or Heighliners that kill and eat unsuspecting borrowers when we are not busy folding space or at the very least ruining the lives of unsuspecting borrowers and loan officers as indicated in one blog that I read.

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For as extreme as your opinion of underwriters may be, I want to first say that we really don’t live to reject mortgage applications, quite the contrary actually. Truth be told, we spend most of the day getting our butts kicked by management to approve as many loans as possible and for a few unfortunate underwriters, this type of thing happens against their better judgment. For many of us, management is unsupportive of the loan approval process because it is comprised of sales oriented staff and as a result many underwriters find themselves under extreme pressure to approve loans that they know don’t meet normal underwriting criteria or a just eminent defaults. Making matters worse, when the cases do finally go into default, the very same management staff wants an explanation as to why they now need to repurchase the loan, in some cases firing the underwriter that approved it. The flip side isn’t much better, a diligent underwriter may reject the loans he or she knows will not perform long term and as you can well imagine, if management feels like numbers are poor because the underwriter is too conservative, he or she may also find themselves looking for work.

Next big compliant where underwriters are concerned is the fact that we do everything at the last minute, like the day before settlement. You know the borrower is all packed up waiting to settle and then boom, the underwriter comes up with a long list of things the borrower needs to provide and settlement is delayed. In response to this I would like to say that this most often happens because the underwriter doesn’t see the loan until the day before settlement and this is most defiantly not the underwriters fault. As flow goes, when a loan officer originates a loan it is their job to review the application and collect the documentation from the borrower that an underwriter would need to get the loan approved. Loan officer are supposed to collect things such as paystubs evidencing that the borrower can repay the mortgage, bank statements evidencing sufficient to funds to close and information as to the name of the borrower’s landlord so that the borrower’s rental history may be verified should be collected at time of application. All loan officers know they need to collect these things but many choose not to because as far as they are concerned, that’s the processors job. Yes that is right, at some point the file is turned over to a loan processor whose job it is to “process” the loan. It is the processors responsibility to obtain the appraisal, run a loan through automated underwriting and request from the borrower all of the things that the loan officer did not collect at time of application. Additionally, the processor should be somewhat aware of underwriting policy and criteria, otherwise many cases will end up rejected at time of underwriter because they do not meet underwriting criteria as set forth by FHA, VA, USDA, FNMA or FHLMC (that’s correct, underwriters don’t make the rules, we just follow them based on the guidelines we are given).

Once the processor completes this step, which by the way they have about two to three weeks to do, they turn the file into underwriting for final review and the underwriter will determine if the borrower meets underwriting criteria as well as guidelines. This is where the complaining starts. Once the underwriter underwrites the case he or she will determine what is missing and quite frankly if the processor did a poor job processing the file and the loan officer did a poor job originating it, then a lot of stuff is going to be missing and the underwriter is going to ask for it. For as crazy as this sounds, we really need paystubs and W-2’s to determine income and bank statements to determine if the borrower has sufficient funds to close. The federal government doesn’t allow us to assume that stuff anymore (think mortgage implosion 2007).Odd however that this becomes a situation of an unreasonable underwriter and not one of why didn’t the processor or loan officer ask for it before the submitted the loan to underwriting. Trust me, they also know we need that stuff. If they would have asked for it, I wouldn’t have to ask for it and the borrower wouldn’t have to provide it a day before closing. Think about the statement “Why am I finding this out at the last minute?” Well because your loan officer and processor didn’t do their job! Think about it, are we saying that all the loan officer and processors should have to be responsible for is filling the blanks in on an application and fastening papers in a file? If that is the case the file should be submitted to underwriting within an hour of receipt, which might not be a bad idea. At least at that point it would give underwriting a full 30 days to process the file which is better that 2 hours and I can assure you, the borrowers would know what they needed to provide sooner than the day before closing. I will close this paragraph by saying if the loan officers and processors couldn’t obtain the paystubs and W-2’s in 30 days why do people think an underwriter can make them magically appear in the file in 5 minutes.

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Let’s now address the complaint that we look for every reason to turn a loan down which I can assure this is not the case. Like I stated above we underwrite to guidelines established by Agency, Non Agency and the Investors. For as much as I would love to do away with credit scoring and AUS, I can’t because no entity would buy or insure the loan. Forget that for a minute however and take a stroll down memory lane with me. In the not to distance past, I distinctly remember the entire country scolding (that’s actually putting it lightly) the entire lending industry and Wall Street for irresponsible lending practices. Remember the outrage, mass foreclosure, crumbling stock market and falling home values that resulted in federal government bailouts not to mention the cost to tax payers that was blamed on irresponsible loan programs and shoddy underwriting practices? So now underwriting does more due diligence, makes sure the mortgage is sustainable for the borrower and we are still ruining people’s lives. We ruined them when we approved any old loan and ruin them if we don’t. Sorry I don’t think underwriters have the issue here, I honestly think people want their cake and eat it too.

In closing I will say that as an underwriter I have been doing the same things that I have been doing for the past 25 years, which is approving the loans that make senses for the borrowers who have a demonstrated history for repayment of debt and the capacity to management the loan payments and alternatively, turning down the loans which don’t meet this criteria. For those of you loan officers and real estate agents who take exception to this I will leave you with a little story to ponder. Many years ago I rejected a loan for a borrower who simply did not qualify. Ratios were excessive, credit was poor and the collateral was less than fair. In short the risk was more than excessive considering the transaction was the purchase of multiple investment properties.. Upon receiving the letter of declination the borrowers filed a law suit alleging discrimination and not wanting to deal with the situation in a court room, our board of directors decided to go ahead and just make the loan. 9 months later the loans were in default and when the Savings and Loan started foreclosure, the borrowers filled another law suit alleging that we made the loans to them know full and well they would go into default and the borrowers were requesting financial restitution. This time however, the board of directors went to court and as you can well imagine the borrowers lost the case with the judge indicating that they needed to accept responsibility for their financial decisions. These days most people are under the impression that personal responsibility is a thing of the past and regardless of the outcome of the mortgage process, you can just blame the underwriter and like that judge many years ago, my opinion is very different. Happy underwriting.

About The Author

Bonnie Wilt-Hild - As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University ( 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:

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.