Mortgage Underwriter Role And Function In Mortgage Process

Mortgage Underwriter Role And Function In Mortgage Process

This BLOG On Mortgage Underwriter Role And Function In Mortgage Process Was UPDATED On January 2nd, 2019

Borrowers who are ready to apply for a residential mortgage loan, there is a process they need to go through no matter which mortgage lender they choose.

  • Once borrowers decide on a mortgage lender, the loan officer will complete and sign a formal mortgage application, also known as a 1003
  • The loan officer will request documents such as the following:
    • two years tax returns
    • two years W-2s, 60 days bank statements
    • other documents that might be necessary such as pertinent documents for those who have filed a bankruptcy, had a foreclosure, deed in lieu of foreclosure, or had a short sale
  • The loan officer will also run a credit check on you and your co-borrower and your credit report will be part of your mortgage process
  • Once borrowers provide the necessary documents, the mortgage application will then be reviewed by a mortgage loan processor and prepared to submit to a mortgage underwriter

Underwriting Application By Mortgage Underwriter

Once the mortgage application has been processed, it gets submitted to the underwriting department of the lender and gets assigned to a mortgage underwriter.

  • A mortgage underwriter is probably the most important person in the mortgage application process 
  • The mortgage underwriter is the person that decides whether a borrower get a mortgage approval or denial
  • If the loan officer and mortgage loan processor has prepared the mortgage package in an orderly fashion with proper letters of explanations so the mortgage underwriter can easily understand and navigate the file, the chances of getting limited conditions will likely
  • However, if the loan officer and mortgage processor has submitted documents with missing pages and did not submit all documents that have been requested, the chances are great of getting mortgage underwriting delayed and possibly suspended
  • Mortgage underwriters are equivalent to IRS auditors
  • They will scrutinize every single aspect of mortgage application
  • If someone intends on pulling a fast one, such as a bogus letter of explanation, they need to think twice
  • Mortgage underwriters have heard every story in the book and their job is to make sure that every item listed on the mortgage application is accurate
  • A mortgage underwriter will only sign off if and only if they can see proof such as cancelled checks or other official documents

Mortgage Conditions

Many loan officers and loan processors get aggravated with mortgage underwriters because mortgage underwriters can be extremely anal and request ridiculous conditions.

  • Once we submit the requested conditions, we can get another set of conditions by the same mortgage underwriter
  • Common sense is why didn’t they ask for all the conditions at once
  • There are times when we get multiple sets of conditions after we submit initial conditions
  • We cannot whine nor bitch at the mortgage underwriter
  • This is because we are at their mercy in getting a mortgage approval
  • We need to realize that mortgage underwriters have an enormous responsibility as well
  • This is because if they make a single mistake, the wholesale mortgage lender cannot sell the mortgage loan to the secondary market
  • Like many professions, there are great underwriters and mediocre underwriters

An Example of the Perfect Mortgage Underwriter; Christine David

I recently submitted a conventional mortgage loan for a client who has a deed in lieu of foreclosure two years ago but met Fannie Mae’s guidelines in qualifying for a conventional loan with 20% down payment and actually closed on this loan this afternoon.

  • I submitted this conventional loan to the mortgage underwriter and it was assigned to this loan was Christine David
  • Mortgage Underwriter Christine David is probably, hands down, the best most professional underwriter I have ever seen in action in the 20 plus years in business as both a real estate investor and mortgage banker
  • Once I got the file submitted to underwriting, I got a conditional approval from Christine David. 
  • The conditions were extremely reasonable and it was upwards of 30 plus line items
  • Christine David requested that our processing staff accumulate all the conditions all at once and submit it all at once
  • Our processing staff followed her instructions
  • It took us several days to accumulate the requested conditions from our borrower
  • Once we had it all ready, we resubmitted it to Christine David
  • Within 24 hours, Christine David got back to our processing department and needed certain clarification on the documents we submitted
  • 80% of the conditions were signed off but the 20% of the conditions needed clarification
  • It took us less than a day to get the conditions requested by Ms. David and we submitted it back to her
  • Within 24 hours, Christine David has issued a clear to close
  • Today was the closing date and we had a final glitch because of being $800 dollar short and being able to source that
  • Christine David was on standby and told me what she needed
  • Got her what she requested and she signs off on the wire
  • Unbelievable teamwork and an example of how having a professional underwriter like Christine David
  • Ms. David made an almost delay make the deal happen.  

This is a perfect case scenario how having a rock star mortgage underwriter like Christine David who is hands on and thinks outside the box made a family, my borrowers, super happy and make their dreams of home ownership become a reality.

Gustan Cho NMLS ID # 873293

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