The U.S. mortgage crisis was partially due to banks and lenders not properly verifying borrowers’ financial histories and statuses, states a FINS article (“So You Want to Be a Mortgage Loan Officer”) by Sindhu Sundar (June 21, 2010). In other words, many lenders were relying on unskilled underwriters to assess the risk of granting a mortgage loan to borrowers and now the hunt is on for those who are actually qualified to carry out this profession. “Banks and lenders across the country are casting their nets to try to find qualified mortgage loan underwriters — there’s a demand for around 5,000 in the immediate future,” wrote Sundar. “But there’s a catch: Banks are having trouble finding them”.
If you’ve read our page on Mortgage Bankers/Loan Officers, you know they represent the “face of the loan process”. Mortgage loan underwriters, on the other hand, work behind the scenes. They review each loan application accurately and fairly, while abiding to all relevant guidelines, and analyze the risk of granting that loan (i.e. the likelihood it will be paid back at the agreed terms).
If you are analytical, detail-oriented, comfortable with learning and using software, have the ability to comprehend financial components relevant to the loan process and capable of looking at the big picture, then you could help fill the great demand for mortgage underwriters.
“Put simply, the underwriter’s job is to approve, suspend, or decline your mortgage application,” states The Truth About Mortgage’s Colin Robertson. He adds that underwriters decide if a mortgage loan application will be approved based on the “three C’s of underwriting”:
• Credit reputation (credit history or credit score)
• Capacity (the ability to pay the loan back by looking at salary, other sources of income and existing expenses)
• Collateral (the ratio between the value of the loan and the value of the property to be purchased – loan-to-value ratio)
Underwriters use specialized software (i.e. Automated Underwriting Systems or AUS) to help make decisions for each mortgage loan application. Whereas in the past, underwriting relied solely on plugging numbers into the software, now underwriters must strike a balance between using the software and their own expertise/critical thinking skills.
• Insurance Underwriters
• Forensic Underwriters
• Sponsorship Underwriters
Degree and Certification Recommendations
Although not necessarily required, a university degree in finance or accounting can help pave the way to beginning your career as an underwriter. Some universities even offer finance degrees with the option of minoring or concentrating in mortgage loan underwriting. At the very least, while pursuing your degree, you should take related courses such as real estate and mortgage law, principles of mortgage lending (for both residential and commercial properties), the fundamentals of underwriting and banking information technology.
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Additionally, the National Association of Mortgage Underwriters offers many classes as well as various certifications, whether you are just beginning or have already started your underwriting career. Examples of classes include “Underwriter 101 – The Essentials”, “Due Diligence – Manual Underwriting” and “FHA/VA Underwriting”. Examples of certifications include NAMU®-CMU (Certified Mortgage Underwriter), NAMU®-CMMU (Certified Master Mortgage Underwriter) and NAMU®-CCUP (Certified in Commercial Underwriting and Processing).
The U.S. Bureau of Labor Statistics (BLS) includes “Loan Underwriters” under the category of “Loan Officers”. According to the BLS, the salary and job outlook for loan officers is:
Job Outlook: 14% (2010-2020)
Median Salary: $56,490/year (2010)
In a FINS article by Sindhu Sundar from June 21, 2010 (“So You Want to Be a Mortgage Loan Officer”), it says, “A junior underwriter could start off at a salary of $40,000 to $50,000 a year, [Paul Hindman of Management Advisors International] said. A senior underwriter could make up to $75,000 to $80,000 a year”.