Saturday, July 19, 2008

Underwriters Originating Loans - Good or Not So Good?

I received the following question from an underwriter. I do not know what mortgage lender she works for nor do I want to know.

I did not respond to her question for several reasons, the main one being I do not give legal advice. However, I do have an opinion and perhaps this is a good place to put it. Here is the question:

What, if any, are the ramifications to the Lender if the Lender requires the
mortgage underwriter to originate loans to walk in clients, then underwrite
and approve and/or deny those said loans? thank you...

Wow, that is a loaded question and if it is indeed a common practice me thinks it is an accident waiting to happen. I see that there are at least two ways to look at this.

An underwriter should be totally unbiased when underwriting a loan. That may be difficult if they also originated the loan and liked or disliked the borrower. It would take very strong character to not be influenced one way or the other.

On the other hand, as a person with years of management experience in balancing budget and controlling overhead and costs, I can see why the lender would need for employees to take on duel roles ... especially in today's market. Is it a conflict of interest? What do you think?

Are there legal ramifications? ... I don't have a clue!

Please, leave your opinion.



  1. I agree, this does not sound like a good idea. What if a loan would be turned down, then the borrows could sue for discrimination or something.

  2. My husband and I are trying to by a house we are supposed to close in five days and as far as our loan officer knew we were all set to close, but then today the loan underwriter he was working with went on vacation and the loan was passed on to another underwriter who denied our loan because I haven't been at my current job for two years but I am days short of starting my second year there, but my seasonal job I have, they just don't want to take that as income for two years. The denial of the loan came as a surprise to us and our loan officer. We would really appreciate any advice!

  3. Hi,

    I like your blog and have a great experience with it. I am fully satisfied with your services and some of my friends are also using your services, they are also fully satisfied with you and your services. Thanks for sharing the helpful information. I am waiting for your upcoming services.

    Have a nice day...!!

    Loans on Car