Borrowers don’t need to see the sausage being made
This month, we discuss underwriting mortgage loans, and I have been trying to come up with a good
analogy for the process. A couple of years ago, I likened underwriters to the Wizard of Oz — people behind
a curtain who pull the levers and make the magic work. Today, I think a better analogy is a butcher or, rather,
a grocery store butcher department.
It’s not that underwriting is like making sausage — something you are better off
not seeing for fear of putting you off eating sausage forever. It’s that like butchering
meat, underwriting happens behind closed doors, away from the public eye. So, if
something goes wrong during the process, the borrower will blame the originator
and not the underwriter, just like a shopper who buys a package of rotten sausage
will complain to the store manager and not the butcher.
This isn’t to say that the underwriter was at fault. There are many reasons that
a mortgage loan can get denied during underwriting. The point here is that
originators should never take underwriting for granted because they put their
reputations on the line with every loan they send to underwriting. Every denied
loan is not just a loss of commission, it is a potential loss of a client and the future
referrals — future business — that client might have provided.
To help our readers get more loans through underwriting, we present a number
of articles this month about how originators can work more efficiently with
underwriters. Our lead article, by Richard Garrie of United States Appraisals,
discusses what originators need to know about dealing with red flags within Fannie
Mae’s Collateral Underwriter program. Turn to Page 35 to read Garrie’s article.
For more information about underwriting, check out the article on Page 66 from John Pataky of Everbank
and the article on Page 146 by Carla Blazek of Inlanta Mortgage. Pataky believes good underwriting begins
at the pre-approval stage. Blazek discusses how trended credit can help borrowers with nontraditional
credit reports. Rounding out our coverage of underwriting, we present an article about underwriting
reverse mortgage loans by Yanni Raz of HML investments on Page 108; an article discussing the human
element needed when working with automatic underwriting systems by Craig Robertson of Waterstone
Mortgage Corp. on Page 152; and an article about the underwriting barriers faced by millennials by Esther
Phillips of Key Mortgage Services Inc. on Page 140.
Of course, underwriting is just one important part of the sausage-making process in mortgage lending. In
this issue we also present a number of articles that look beyond underwriting. Three of the most prominent
topics today are rising interest rates, technological efficiencies and paperless mortgages. Brent Nyitray of
iServe Residential Lending on Page 53 presents his take on the effect of rising interest rates on the mortgage
industry. Linn Cook of LendingQB on Page 81 makes the case for human collaboration to get the most of
out of the technology behind loan origination systems. And, Seth Kronemeyer of Equifax Mortgage Services
discusses on Page 103 the important next steps the industry must take on the path to paperless mortgages.
Like a sausage casing filled with delicious spiced meat, there are plenty more articles on a wide variety of
mortgage topics filling the pages of this issue. Although you probably don’t want to watch the process that
led to the production of this magazine, we promise you will enjoy digesting it.
From the Editor
By Will McDermott
Will McDermott is editor of Scotsman Guide Residential Edition.
Reach him at (800) 297-6061 or firstname.lastname@example.org.