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Facing Down the Industry’s Looming Capacity Crisis

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.