The loan underwriter is the person who makes the final determination about whether your borrowers meet the criteria for the loan they’ve applied for. If the loan guidelines say your borrowers must be at their current jobs for at least two years, the underwriter will review the documentation from the processor and make sure that they have in fact been at their jobs for two years (i.e., do the last two years of W-2s have the same company name as the paycheck stubs?). If the borrowers meet the criteria, the underwriter can sign off on the loan requirement. The underwriter interprets lending guidelines and reviews documentation. If your loan processor has done his job correctly, the underwriter simply goes down the submission sheet and checks things off as they’re submitted.
If the loan requires $10,000 in the bank, the loan processor docu- ments $10,000 in your client’s application via recent bank statements and puts the documents in your borrower’s file for the underwriter to review. If the bank statements show $10,000 in the bank, then that requirement has been fulfilled. If the bank statements show $9,999, then regardless of how close $9,999 is to $10,000, the underwriter can’t approve the loan. It doesn’t meet the guidelines.
Underwriters can also make judgment calls about a loan application as long as the calls are within bounds of the loan guidelines. There are requirements and there are guidelines. A requirement is a ‘‘must,’’ but a guideline might have some latitude.
For instance, you might have a borrower who can’t show that she has been self-employed for two years, a common requirement. Typically, a condition to prove self-employment for two years is to provide two years of tax returns. Sometimes though, the borrower hasn’t filed on time or has filed for extensions.
So the underwriter might waive the requirement for two years of tax returns if there is another method the underwriter feels is appropriate to verify the two years of self-employment. I recall a client a few years ago who had placed an ad in the yellow pages. The telephone book was published more than two years ago, so I forwarded the phone book to the underwriter. It worked. The underwriter used her latitude to document a lending guideline.
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