What Role Does an Underwriter Play in the Mortgage Underwriting Process?
November 26, 2012
Underwriting is a process through which a lender or insurer calculates the risk of adding that loan or person to the company’s liability. This is a very important process in mortgage underwriting, especially given the recent issues in the housing market. Mortgage lenders are extremely wary of taking on risks that indicate high likelihood to default, and mortgage underwriters are the people involved in determining this risk and presenting it to the company.
As the need for mortgage underwriting has grown, more reliable and valid models of calculating this risk have been developed. There are even computer models used to take into account a variety of factors and give the lender a starting point as well as recommendations for that particular home and family. Advances in technology allow for a better understanding of risk and a better capability to manage underwriting.
Restrictions on lending have definitely tightened up across the board in recent years, making the job of a mortgage underwriting company all the more important. The cost associated with hiring a mortgage underwriter can be extremely high for a smaller company, who can’t afford to keep an entire team on retainer. This is where mortgage underwriting outsourcing comes into play. Many other industries are relying more and more on remote workers these days, which helps to save on office costs. In addition, employees that work remotely tend to be happier with their jobs, typically leading to higher production and performance.
There are other benefits to hiring a remote mortgage underwriter, including their ability to finish a job more quickly. These employees are similar to freelancers, who don’t have a particular commitment to one company, but work for several companies on an as-needed basis. Your company saves on all the costs associated with hiring a full time underwriter but benefits from the remote worker’s experience with multiple companies. This reduces the need for additional training on your part and allows you to have a reliable professional “on call”, saving you time and money.
Hiring a mortgage underwriter allows you to determine additional information about the applicant that could affect your bottom line. Underwriters are skilled in evaluating documents and sources of income to provide you with the tools to make an informed decision in your lending. Many have been working in the industry actively since the housing collapse, leading to increased understanding about the multiple factors that can impact a loan’s viability and the likelihood of default. Armed with software and models to back up their evaluation, an outsourced mortgage underwriter can be one of the most valuable tools at your disposal. The more risk you are able to calculate before the mortgage is active, the better “risks” held via loans to homeowners.
There are several reasons to hire an outside mortgage underwriter, including:
- Saving on the expense of hiring a full time underwriter by hiring someone on an as-needed basis
- Remote employees can capitalize on their years of experience to make informed decisions for your business
- Remote employees are often happier and complete work very efficiently
- Your company gains the flexibility of working with multiple underwriters if desired
Although mortgage underwriters can be expensive to hire, the growth in remote underwriting outsourcing allows you to play the game without absorbing all the cost. For a portion of what you’d pay for a full-time underwriter, you can have the peace of mind that an underwriting expert is available to help you on an “on call” basis to evaluate your risks.
If you are looking to hire an Underwriter, reach a mortgage back office solution provider and have an Underwriter operational within a week!