Facing Down the Industry’s Looming Capacity Crisis

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May, 2021

An industrywide shortage of underwriters may soon collide with the recent foreclosure moratoria to create several problems.

The capacity crisis in mortgage originations is being precipitated in part by a lack of compe­tent underwriting talent relative to demand. With pipelines bulging, the cost of an under­writer has virtually doubled in the last six months and loan cycle times have extended dramatically, exceeding 80 days (up from 45).

Underwriters provide the criti­cal thinking skills necessary to determine if a borrower is eligible for a loan. Underwriters must successfully complete their analy­sis or there is no loan—none.

To determine if a borrower is eligible for a loan, an underwriter must detect and resolve incon­sistencies (i.e., anomalies) that occur within the infrastructure of a loan. Underwriters look for anomalies across the three ele­ments of loan infrastructure:

  • the borrower’s application
  • data about the borrower (pay­stubs, bank statements)
  • investor guidelines—the criteria a secondary market investor will use to determine if the loan is eligible for purchase.

Read the entire article here.