Mortgage Careers 2010 Jun 21 2010

So You Want to Be a Mortgage Loan Underwriter...

By sindhu sundar

Banks and lenders across the country are casting their nets to try to find qualified mortgage loan underwriters -- there's a demand for around 5,000 in the immediate future. But there's a catch: Banks are having trouble finding them.

In the wake of the subprime mortgage crisis, qualifications for mortgage underwriters have changed.

"Before, anybody could be an underwriter," said Paul Hindman, the managing director of Management Advisors International, a N.C.-based finance recruiter. "You just took your senior processor and promoted them to an underwriter. But underwriting guidelines are constantly changing with the credit market. And you need professionals who are keeping up with that, and there aren't enough of those."

The Need

For as long as people take out loans, there will be a demand for the underwriters who make sure applicants qualify for those loans. The Bureau of Labor Statistics projects the demand for loan officers, including underwriters, to go up at least 10% by 2018. And this is after accounting for the job loss that the increasing automation of the process will cause.

The Pay

A junior underwriter could start off at a salary of $40,000 to $50,000 a year, Hindman said. A senior underwriter could make up to $75,000 to $80,000 a year. Reed Piano, the managing director of the National Association of Mortgage Underwriters, added that, typically, all underwriter jobs come with full benefits, like health insurance and paid vacation.

New Requirements

In the wake of the subprime mortgage crisis, caused in part by lenders giving out loans without verifying applicants' income and assets, the process of approving a loan has become much more rigorous. Underwriters now need to file what is known as a "form 4506" to verify an applicant's income.

Another tricky part about underwriting is learning to work in tandem with the software that comes with the job, instead of relying solely on it to produce the right output, as had been the practice of many underwriters in the pre-subprime days. Most lenders use proprietary systems to validate loans, but recruiters say that over-reliance on Automated Underwriting Sytems (AUS) in recent years has undermined the manual skills of discretion and familiarity with regulations the job requires.

Nitin Dave, a retired senior business manager at Fannie Mae said: "The real role of an underwriter is to verify the information that goes in the AUS. Otherwise, it's a classic case of garbage in, garbage out."

Getting Certified

Training varies depending on the skill and experience of the applicant. Employers don't expect an experienced candidate to have a college degree, though recruiters say a degree in a related field such as finance or accounting would be an asset to a rookie.

The National Association of Mortgage Underwriters offers a variety of 35 different underwriting courses from which applicants can select the ones that are relevant to them.

"People will typically take three to seven courses, depending on what they need and can afford," said Piano of NAMU. Courses are six hours long and each can cost around $400.

Students have the option of taking online classes that have been recorded and posted on the Web or live classes with an instructor. Online courses can be completed in as little time as a week while live courses take four or five weeks to complete.

There are three basic NAMU courses to take for the minimum level of qualification: "Underwriting 101 -- The Essentials," "Advanced Underwriting -- Real World Lessons," and "FHA VA underwriting."

The first two courses teach "core fundamental skills," Piano said, while the last one prepares candidates for underwriting government loans, which also requires what is known as a "Direct Endorsement" certification.

There is a particular demand today for "Direct Endorsement" underwriters, who are qualified to underwrite government loans on top of conventional loans. "The market dictates the product mix," said Hindman. "And right now, the volume of government loans is at a higher percentage. That's why there's the demand."

DE underwriters are a rarity, Piano said, because of the difficulty of getting the "DE" certification from the Federal Housing Authority, the only agency that issues the certification. Hurdles include keeping up with all the FHA learning requirements and finding at least 15 to 20 test cases (which you can gather through the course of your employment as an underwriter) and submitting them for consideration.

"There's a misconception that you just need to take training courses to be DE certified," said Piano. "Training is a part of it but you also need to find an employer who would sponsor you."

Industry insiders refer to the DE underwriter qualification as the "Gold Standard" in underwriter certifications. For your pains, you will be rewarded with seniority, the authority to underwrite government loans (on top of conventional loans) and, depending on the employer, a 5% to 10% higher salary than a conventional loan underwriter.

"The reason it's more involved is that any government-backed loan is more work, it's a more thorough process," said Hindman.

The FHA and many loan training programs offer courses toward this certification and they typically cost in the neighborhood of $500 and span anywhere between 3 months to a year. offers more information about courses.

What It Takes

Training and certification aside, personal traits such as analytical thinking and good communication can also take you far in the field, industry veterans say. "It's a very analytical position," said Kimberly Kurtz, an assistant vice president of operations and DE certified underwriter at Connecticut-based Luxury Mortgage Corp. "There's some number crunching but it's more about looking at the whole picture and making credit decisions."

Kurtz also said that the job provided ample opportunities for women in finance. "There are many women who have high level jobs in big mortgage companies and it inspires me," she said.

The Downside

With firms feeling the pinch from the shortage of qualified, experienced underwriters, existing employees are made to work extra hard to pick up the slack. Kurtz reported spending at least an extra 10 hours a week at work in recent months.

"Also, lot of mortgage companies have closed," said Rhonda green, a senior underwriter at Union Bank, who has worked in the field for over 15 years. "It can get hectic, especially when you're dealing with borrowers that want to move right away. Everything is a rush, rush, rush."

Write to Sindhu Sundar

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