Today's underwriting subject is Finger Pointing. I know most of you are asking "What mortgage product is that? I've never seen or heard of that condition? Do you mean when the Underwriter is finger pointing?"
I had a few good underwriting questions I wanted to share with you guys this week. I wish I could write to you about them today, but the truth is I can't. I have to get something off my chest. I've been interviewing Account Executives for the past few weeks now and I've been hearing some very disturbing ideas on why the industry is in the position that it's in now. Maybe the things I've been hearing are part my fault; I should have probably started the interview off with something like:
"Hello My Name is D. Bass; I'm a Laid off Underwriter". Maybe I should have asked them to stick to the purpose of the interview "SALES", but I being the nosy person I am ....I had to listen!
Okay AR buddies...here it is. The reason the mortgage industry is in the toilet now is the:
THE UNDERWRITERS FAULT!
Now I have to admit the first time I heard it I thought it was just someone who didn't understand the function of an underwriter. After the 3rd time I thought to myself: "Is this the new thing it's the underwriters fault. WOW! Let me first say this: The underwriter reviews the file based on the SET guidelines by the INVESTOR or BANK.
Here is an example: Sample Stated Income Guidelines in Italics:
1. Character (credit) - Credit report or alternative credit (utilities, insurance, car payment, rental history) sample guidelines: minimum credit score 620, at least #X number of trade lines with 12 month history. 12 month history for mortgage or rental history.
2. Capacity (income) - Verified Income or Stated ~ sample guidelines: 2 year history in the same line of work, DTI max #XX%. Verbal verification of employment required at closing.
3. Capital (assets) - Checking, Savings, 401k, etc... sample guidelines: #XX amount of months reserves (verified or stated)
4. Collateral (property) - Subject property:
Now if the investor that I underwrite for wants to lend someone money without verifying their income, should I get upset and quit my job? If an investor wants to allow a mortgage file to close without an appraisal should I get upset and quit my job?
Now all underwriters have different personalities, backgrounds, interest, experiences, etc. What one underwriter may perceive as "REASONABLE INCOME" another may research it a little different and find that is "REASONABLE INCOME". One underwriter may come from a small town, but is underwriting loans all over the country. Now tell me this, what would someone from a small town know about property in a large city. I live in Canton, Ga, but I come from a city that had Million dollars properties across the street from housing projects, $500, 000 dollar homes across the railroad tracks from $75,000 dollar homes.
My opinion of the mortgage meltdown: GREED
Greed is what brought down the mortgage industry.
Not:
1. "Sneaky Sam" the loan officer: We all know that there are some people that will never change and NEVER get caught.
2. "Aggressive Aaron" the Account Executive: We can't blame Account Executives for pushing programs that their companies were funding! That was the market back then.
3. "Pushy Peggy" the Loan Processor (Account Manager or Loan Coordinator): FYI unless you have SOLID evidence you cannot say the "F" word (Fraud).
4. "Appraisers (I ran out of fancy names!)" There are 3 types of appraisers: The Good, The Bad & the New Ones! Nothing has changed. Appraisers have been screaming about the AVM system since it started. You can't blame them for that.
5. "Ask The Underwriter" oops...I meant "Understanding Underwriters" (LOL)
Now last thoughts:
All I'm saying is before we point the finger. Think about how much money was made from 2000-2007 = I think the total amount added up to something like: $GREED!
Tomorrow I will go back to Ask The Underwriter and address underwriting questions & concerns.....
D. Bass
Mortgage Underwriter & Trainer
Account Executives Needed: careers@alphamortgagetraining.net
Questions: asktheunderwriter@alphamortgagetraining.net
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