How to hire for a Loan Underwriter?

 Summary:

Underwriters are financial specialists who work in the banking and insurance industries, and stock markets. They evaluate, research and undertake a client’s risk for a fee such as a commission, premium or interest. 

Standard Job Description: 

Loan underwriters, or loan officers, evaluate applications for loans and make decisions regarding whether to approve an applicant for financing. A loan underwriter will meet with loan applicants to discuss personal and financial information material to the decision-making process. Underwriters assist applicants by explaining the various types of loans and their repayment terms. Underwriters then evaluate and analyze the financial portfolio of a loan applicant to make a final decision whether to lend money. Loan underwriters can work as mortgage, commercial or consumer underwriters. 

Underwriters for mortgage loans make sure that any applicants meet all the necessary requirements, and then deny or approve any loan. The
underwriter will also review the appraisal of a property to make sure that it is up-to-date and accurately reflects the loan amount. 

Loan underwriters look at three main factors, often called the three C’s: credit, capacity and collateral. 

1. Credit. Your credit history is an important influence on a lender’s decision because it shows how you’ve handled credit in the past. In addition to your credit score, an underwriter will look at your credit report for any negative information. For example, if you’ve declared bankruptcy, experienced a foreclosure, or been delinquent on a mortgage or any other type of loan or a credit card, it could be a sign that you’re a risky borrower. 

2. Capacity. A simple way to determine your financial capacity is to calculate your debt-to-income ratio – that’s the sum of your monthly debt payments divided by your gross monthly income. Underwriters will also consider other factors, such as how many people are on the loan, how much cash you’ll have in reserve after you’ve made the down payment and paid closing costs, and whether your income is based on a salary or self-employment. 

3. Collateral. Some loan programs may require that the property meets certain safety and other standards and that the loan amount doesn’t exceed the program maximum. Also, lenders want to ensure that the appraised value of the home is enough for the lender to recoup its costs in
case you default on your payments. 

  

Key Job Responsibilities:

1. Collect appropriate and accurate information required to assess potential clients and decide on the acceptable risk for a policy. 

2. Review policy applications based on the previous loss records, age, credit ratings and driving records. 

3. Prepare reports that detail risk assessment findings that contribute to the final decision. 

4. Compare various policies having similar risk undertaking and conduct actuarial studies to decide on the company’s loss records. 

5. Evaluate policies with regards to the company’s underwriting standards. 

6. Decide to accept, modify or reject an insurance application after scrutiny of all the required documents and studies regarding the risk involved. 

7. Analyze statistical data using specialized computer programs. 

8. Write quotes, determine premiums and coverage, and negotiate terms with brokers and clients. 

9. Carefully select the wording of policies and prepare the terms and conditions. 

10. Handle queries from credit control departments, brokers and clients. 

Ideal Candidate:

1. Analytical thinker with research proficiencies. 

2. Ability to use reasonable and sound judgment. 

3. Strong problem-solving and decision-making skills. 

4. Thorough knowledge of databases and tracking systems. 

5. Solid organizational skills and detail oriented. 

6. Ability to work under pressure and meet strict deadlines. 

7. Strong interpersonal and negotiation skills. 

8. Brilliant IT, math and statistical skills. 

9. Deep knowledge of underwriting regulations. 

10. Ability to build positive relationships and partnerships with clients, brokers and key role-players. 

Desired Education: 

Any Graduate or Post-graduate Degree in Finance or Business Administration 

Certifications Associated: 

1. JAIIB exam conducted by IIBF. 

2. Certification in Credit Rating by BSE. 

3. Certified Credit Professional by IIBF. 

Key Skills: 

ICWA, Fund, Banking & Finance, CAIIB, Actuary, Credit, Credit Appraisal, Underwriting, Financial underwriting, Underwriting of Mortgage Loan & Business Loan. 

Common Positions: 

1. Credit Underwriter 

2. Mortgage Underwriter 

3. Underwriter 

4. Origination Underwriter 

5. Actuarial
Analyst/Associate/Manager
 

6. Claims Adjuster/Analyst/Examiner/Manager/Representative/Specialist/Clerk 

  

Screening Questions/Assessment Parameters:

1. What type of loans were approved  

2. Experience of handling Personal Loan and Home loan cases 

3. Types of customers assessed Example-international clients, salaried employees, farmers, business owners etc. 

4. Did the person had final sign off authority and up to what amount. 

5. Prior experience in credit risk /underwriting. 

6. Product for which credit risk assessment was done. 

Basic Terminologies:

1. All Perils. An optional coverage designed to provide protection for your vehicle for all types of losses except those specifically excluded in your policy.  

2. Embezzlement. The fraudulent use of money or property that has been entrusted to one’s care. 

3. Joint Tenancy. Ownership of property shared equally by two or more parties under which the survivor assumes complete ownership. This
is different from a tenancy in common, where the heirs of a deceased party to the tenancy inherit his or her share. 

4. Lessee. The person to whom a lease is granted, commonly called the tenant. 

5. Lessor. The person granting a lease, also known as the landlord. 

6. Libel. A written statement about someone that is personally injurious to that individual. 

7. Mortgagee. The creditor to whom a mortgage is given, and who lends money on the security of the value of the property mortgaged. 

8. Named Perils. Named perils are the specific dangers a policy insures you against – such as fire, windstorm, and hail in a homeowner’s policy. These perils are “named” or listed in the policy. 

9. Arbitrage. Act of buying an asset/security in one market and selling simultaneously in another. This restores equilibrium in markets that are temporarily out of equilibrium. 

10. Delinquent. A situation where one fails to make payment, which can lead to foreclosure. 

Industry Jargons: 

1. Underwriting: This is a process by which a life insurance company assesses and classifies the risks.  

2. Projected Investment Rate of Returns: The projected invested rate of returns are investment returns that the participating fund is expected to earn after accounting for expenses 

3. Freelook Provision. In simpler terms, it is an option to get the refund if you don’t like the contract terms. 

4. Annuity. A series of receipts or payments of a fixed amount for a specified number of years. Alternatively, a pattern of cash flows that are equal in each year, that is, equal annual cash flow. 

5. Guaranteed Loan. In this case, a third party guarantees the payment of a loan if the borrower fails to perform. 

6. Hedging Approach. Financing the short-term requirements of funds by short-term and long-term requirements by long-term funds. 

7. Internal Rate of Return. The rate of return that equates the present value of future cash flows to the initial investment on the project. 

8. Option. It provides its holder with an opportunity to purchase or sell a specified number of shares at a stated price or on before a specified period. 

9. Restructure. Making changes in the original agreement with the consent of the parties involved. 

10. Roll Over. A situation where parties to the contract agree to carry over the loan for another stated period at the time of maturity. 

Benchmark Profile: 

Benchmark Profile on LinkedIn (1) 

Benchmark Profile on LinkedIn (2) 

Benchmark Profile on LinkedIn (3) 

Benchmark Profile on RMS(1) 

Benchmark Profile on RMS(2) 

Benchmark Profile on RMS(3) 

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References:

https://www.betterteam.com/underwriter-job-description 

https://work.chron.com/job-description-underwriter-7359.html 

https://medium.com/@fidentiaX/life-insurance-jargons-yet-another-10-commonly-used-terminologies-explained-simply-4fa7f23962b2 

https://www.warriortrading.com/underwriter-definition-day-trading-terminology/ 

https://www.ona.ca/resources/terms/ 

https://www.bostonapartments.com/loans/loan-terminologies.html 

https://loans.usnews.com/what-is-loan-underwriting  

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