Roles and Responsibilities of the Contract Underwriting Company

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If you are in the business of providing real estate loans then you may want to consider using the services of a contract underwriting company. These companies provide underwriting for mortgage loan applications and possess the know-how and competencies to evaluate, select and deselect applicants, and to ensure that your business demonstrates prudent risk management. These companies exhibit a high level of expertise in evaluating loans for acquisition of real estate and operate in accordance with systematic policies and procedures to protect their clients from unnecessary risk.

Functions and Responsibilities

Contract underwriting companies are guided by a set of rigorous credit standards against which all loan applicants are measured. The measurement criteria are robust and will either meet or exceed the standard of the lending institution. A contract underwriting company will typically be well versed in evaluating credit risk, and small companies that assist ordinary people to acquire loans for home mortgages may want to identify the benefits of using their services. Before you consider outsourcing your underwriting function to a contract underwriting company you will need to understand the roles and responsibilities of such an institution in assisting you in meeting and exceeding your risk management goals.

Investigator

Underwriting may be considered as one of the most critical stages in the mortgage loan application process. The contract underwriting company will process your loan files by reviewing them with an in-depth level of scrutiny. They are trained to uncover fraud, appraisal errors, false information, forged documents, appropriateness of comparable properties, and much more. In essence they protect small businesses from unnecessary risk and provide their findings and recommendations regarding approval or rejection of the loan. They will ask potential borrowers to provide their most updated credit reports and check these reports against Fair Isaac Corporation Credit scores released via Trans Union, Experian and Equifax. Essentially, they will pick up any areas for concern, contact the borrower and further investigate reasons behind previous bankruptcies. These reasons will be assessed to determine viability and make an assessment on the current creditworthiness of the client.

Standard Bearer

While your lending institution will have credit standards by which applicants will be assessed, the contract underwriting company will raise the bar, acting as your own bureau of standards for assessing the risk involved in granting loans to applicants. They not only adhere to the lending institutions credit standards but operate by relevant benchmarks for managing risk and assessing appraisals. A contract underwriting company will implement foreclosure avoidance mechanisms, and a general set of best practices that ensure virtually risk-free loan approvals.

Recommender

By far the most crucial role provided by the contract underwriting company will be its recommendation to grant or deny the loan. This recommendation will only come after thorough and rigorous research is conducted on the creditworthiness of the borrower. With the recommendation of a contract underwriting company small businesses can rest assured that their credit risk management portfolio is intact. This will give small businesses the confidence to grant loans, knowing that they can avoid high incidences of foreclosure. They can be sure that their clients are solvent, have good credit ratings, and possess the right collateral. They can have the confidence that they are doing business with well-qualified clients who will be able to pay off their mortgages and avoid foreclosure.

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