Little Things that Make a BIG Difference in Underwriting

Written By: Stacey Sprain

There’s nothing an underwriter hates more than a sloppy, incomplete file that a processor is insisting be rushed through the system. Processors that make a habit of submitting poorly processed files often blow their reputation with underwriters who deserve quality loan files to review so that they can do the best possible job of analyzing the borrower’s credit profile to quickly determine whether or not they are worthy of repaying the loan for which they have applied.

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Below is a list of suggestions and reminders to processors from an underwriter’s perspective. These are simple little things that when provided as described, can make all the difference in the world when it comes to efficient underwriting.

• Provide a Cover Letter giving a quick overview of the loan file and documentation included within it
• AUS findings should reflect the most recent run with all updated, verified and finalized information and the file should include the minimum required documentation as per the AUS findings report
• The credit report being submitted with the loan file should be the same credit report reference number reflected in the AUS findings report
• Make sure all documents are valid at the time of underwriting. Most documents are valid for 120 days as of the note date with new construction docs valid for up to 180 days. If you can tell by the proposed closing date that documents will be expired prior to closing, it makes sense to obtain updated documents and to submit them with the underwriting file so that the underwriter doesn’t have to review a resubmission for updated credit documents at a later date
• Make sure the 1008 Transmittal and 1003 Loan Application are updated with details to match the file documentation being submitted for review.
o Condominium or PUD classification should be indicated once verified, etc.
o Dates of residence history and current housing expense should be updated on the 1003 when there is a VOR in the file which provides verification of the details
o Employment start dates, end dates, position and telephone contact number should be updated on the 1003 to match verbal or written VOE documentation in the loan file
o Income should be updated on page 2 of the 1003 to match the qualifying income calculations made upon verification of income and earnings detail in the loan file
o If page 1 of the 1003 indicates the borrower currently rents or owns, the current housing expense section on page 2 of the 1003 should indicate the monthly housing expense. This is often left blank and overlooked in processing.
o The proposed housing expense section on page 2 of the 1003 should reflect the updated, verified monthly amounts for property taxes, hazard insurance, HOA dues, and mortgage insurance as applicable.
o Mortgage balances should be updated to match the payoff statements obtained for liens being paid off at settlement
o Other debts and liabilities should be updated to match the detail provided on the credit report or other supporting documentation, if applicable
• The package should include explanation letters for omitted debt, inquiries, recent derogatory credit, frequent job changes, gaps in employment and any other non-standard situation uncovered during the processing of the loan application
• Use the lender’s Submission Checklist to assemble documents in the preferred order at time of submission and use the checklist to make sure all pertinent documentation is included to avoid unnecessary conditions
• Make sure all disclosures are complete, signed and dated by all parties as needed
• Make sure 1003 includes the originator’s and borrower signatures and dates
• Make sure regulatory disclosures were provided within the appropriate time frame to meet minimum disclosure timing requirements. Provide an explanation letter to address inconsistencies and variables.
• Make sure all copies are made with documents facing the same direction and that copies are legible at the time of submission. Documents that are cut off, blurred, or that display fonts too small to read should be re-made prior to submission so the underwriter can quickly scan each page for the detail needed.
• Make sure bank statements include all pages, even if certain pages contain little or no information
• Make sure tax returns include all schedules referenced within them
• Make sure appraisal photocopies are legible
• Make sure the lock confirmation is updated to reflect the loan date being submitted with the underwriting credit package. If loan amount, interest rate, term or product has changed in processing for any reason since the original registration or lock date, make sure the registration or rate lock is updated with new information.
• Be sure to check for lender-required forms that may need to be included in the submission package.
• Lastly, take care to give the entire package a final review before submitting and try to look at the package from an underwriter’s perspective. Would you be happy receiving the loan file you are about to submit? What things might you question? What things might not make sense? What things are missing? Quality processing is the result of thinking ahead and addressing every possible hang-up at the time of submission, before it leads to an unnecessary condition or last minute problem.

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Respect the time and job of your underwriters and it will make you better processors! Remember, most underwriters were processors so they know what your job is like. However, most processors don’t have underwriting experience, so it’s important to remain humble and appreciative of the underwriter’s responsibilities. Let your submissions reflect your true talent and not your lack of.

About The Author

Stacey Sprain - As an NAMP® staff writer, Ms. Stacey Sprain is currently a NAMP® member in good standing, and is a NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). With over 15+ years of mortgage banking experience, Stacey is also a Quality Control Manager for a major mortgage lending institution. If you would like to become a volunteer writer for us, please email us at:


Opinion-Editorial (Op-Ed) Disclaimer For NAMU® Library Articles: The views and opinions expressed in the NAMU® Library articles are those of the authors and do not necessarily reflect any official NAMU® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMU®. Nothing contained in this articles should be considered legal advice.