This just in! I'd like you to meet the newest underwriting staff at 'Lost in Space Mortgage, LLC'. Each has their own specialty in underwriting. On the far left, that's R2DU, a clever thing that specializes in Fannie-Mae underwriting. Next in line, that's LPD2, a Freddie specialist who I'm told has a real empathetic side to it. The last two are government machines that handle all the 'govey' loans. Names are protected and they don't speak to anyone. It's amazing they came by for this group photo because they never really associate with the rest of the group.

Really, it's all a joke. No I'm serious, it's all a joke! I can't help but wondering what part automated underwriting has played in this mortgage mess we're in. I'll grant you a machine MAY be able to evaluate an applicant who has solid employment and residence stability, 20% down, with high reserve amounts and a 720 score. But that certainl is not your average client. Here's just one of many examples of this. Just Friday, I closed a retired schoolteacher with a back end debt ratio of 67%. The loan left her 900.00$ monthly to live on. 325.00 goes to her health insurance. Another 345.00 on a credit card leaving her 230.00 monthly to live on. LPD2 decision was it's a go, so it went. No, No, No.....I know what your thinking! I could never put someone in that position unless I knew they would be OK. She'll be getting her 1st social security check in August which will cover the mortgage. My point is that this WAS NOT a consideration for the loan. COULDN'T EVEN BE CONSIDERED!!!!! An underwriter is simply making sure that the applications information matches what R2DU spit out as conditions for an approval. That my friends is a sad state of affairs. No one, and I mean no one should qualify with a back end debt to income ratio of 67%. Heck, we only bring home 65-70% of our gross!!! This lady has absolutely nothing once she pays the bills I've mentioned. 

Some where around 15 years or so ago, the industry introduced automated underwriting. When it first came out, I was skeptical at best. Fast forward to today, and I believe that the human factor's have been totally eliminated from the process. Take the above example. The woman's credit was exceptional, no doubt. However she had over $70,000.00 in revolving debt, $55,000.00 of which we paid off with the sale of her home. The reason for the excessive revolving credit? To make credit payments, pay property taxes, and the like. Had she continued on the path she was going, financial ruin was inevitable! An automated system takes little of this into account. And underwriters doen't seem to have the latitude of decision making they once had. Me thinks it's time to take a hard look at the overall system of automated underwriting and the empowerment of underwriters to monitor and correct the consistency of decisions.

Credit scoring is also automated. A function that drives the mortgage industry that no one seems to be able to pin point EXACTLY how scores are generated. Sure, there's the usual pay your credit accounts on time, maintain a sizable ratio of available credit to balances on your credit cards, limit your credit inquiries, etc. But often times I feel like there is a 'Holy Grail' out there somewhere that can give us the keys to successfully working to drive a credit score upwards when an unfortunate life event occurs to us. Unfortunately, this is certainly not the case. If it was, I grab my fedora and whip and begin my adventure.   Searching for Scoring Keys

Credit reporting agencies are most certainly driving the entire credit industry, yet the responsibility for accurate reporting is always thrust upon the consumer. To have information removed or corrected is a time consuming process that Mr. Average Joe will struggle with each and every time. It gets even more difficult when there are multiple collection accounts sold from servicer to servicer each never leaving a file, appearing as though there in fact muliple collection accounts......The system is certainly not consumer friendly. It seems obvious to me that this system is also flawed. Yet, it seems a long time coming before anything will be done about it. So until then, pay your credit accounts on time, maintain a sizable ratio of balances to high credits, limit your credit inquiries, etc.

My name is Scott Geary and I am a Mortgage Broker serving the the Lehigh Valley and all of Pennsylvania.