What you should know about Mortgage underwriting services in the United States?

Posted by maxbpoblog Apr 02,2021

If you are a new lending organization in the United States, you need to know about Mortgage underwriting. Mortgage underwriting is a process used by lenders to determine the risk involved in offering a mortgage loan to a particular borrower. For ascertaining this, a mortgage loan underwriter follows certain guidelines and checks certain parameters. It is important for all lending organizations to know about the various parameters which broadly comes under the category of the 3 C’s of underwriting.

3 C’s of Underwriting

Capacity: Underwriters assess risk of lending by reviewing documents and paperworks such as bank statements. Tax return, asset statement and so on. They look into the debt-income ratio to ensure the paying capacity of the borrower. This includes –

Looking into the income of the borrower
Assets that the borrower already has
What debts and liabilities the borrower already has

Credit: An important thing in lending is the credit score of the borrower. Underwriters take special care to look into the credit report of the borrower which gives an idea of how the borrower has handled bills and credit in the past.

Collateral: The underwriter also looks into the details of the property the borrower is planning to buy along with the value of the property and how the property is being used. A home appraisal report is submitted to the underwriter for ensuring the loan amount meets the loan-to-value requirements of the property.

As this crucial part of mortgaging requires a high level of knowledge and expertise, you may find it more effective to hire a professional mortgage underwriting services to do the mortgage underwriting process rather than doing it in-house.

Factors affecting the time taken in the US mortgage underwriting

How much time the process of contract mortgage underwriting will take depends on several factors as follows:

The volume and staffing level of your application
The competence of the loan officer
Experience and expertise of the underwriter
Your company’s underwriting process of the
The type of loan the borrower has applied for
How fast borrower respond to the documentation requests
Complexity of the loan application
Result of home appraisal

Support offered by Mortgage Underwriting Services in the United States

Some of the supports followed by third party mortgage processing companies are:

Evaluation of loan file in order of underwriting checklist and preparation of loan closing.
Preparation of disclosures and pre-disclosures for real estate procedure settlement act (RESPA) and truth in lending act (TILA)
Compliance verification to check if loan files are compliant under state and federal laws
Restructuring of loan files
Validation of process files to check if they meet the underwriting needs
Compilation of data to create home mortgage disclosure (HMDA) reports

Conclusion

As the mortgage underwriting process is a crucial process and needs involvement of all parties for faster completion, it is beneficial for all lending organizations to know about the underwriting process. They can benefit from the expert knowledge of professional underwriters by opting for outsourcing mortgage underwriting.