Underwriters Are Not Evil (Not All of Them)
On a recent loan, we needed one simple document from the borrower’s bank, nothing more. We weren’t seeking lost pages of an Ernest Hemingway novel. I’ve read some of his stuff, and anything lost can stay that way, if you ask me. The borrower went to one branch and they were told that what we were requesting was impossible. We’ve obtained this type of document hundreds of times before on other loans. So I was confident we weren’t asking for anything exotic. Even so, the teller insisted to the borrower that they couldn’t provide what we were seeking. They gave him something else. Something that WOULD NOT stand with the underwriter (which I was certain it wouldn’t in the first place).
After reviewing the document he sent over from the bank. I regrouped with the borrower and asked him to return to the bank and ask in a different way. He called me back about twenty minutes later and told me that I would never believe what happened. I told him I’m pretty sure I’ll believe him. I see weird stuff every day. He went to a different branch this time and the teller gave him EXACTLY what we had requested the first time. I burst into laughter.
Then I collected myself and apologized to the borrower saying, “I’m sorry about that. I shouldn’t laugh, but it’s all I can do when I come across these situations, and they happen all the time.” To that, the borrower said, “I don’t see how you can deal with this kind of thing on a daily basis without drinking on the job.” This is coming from a guy who teaches high school so his own level of “grin and bear it” has to be through the roof.
I shared that little piece of . . . absurdity. So I could share this with you. There’s a very solid reason underwriters are so persnickety and insistent. Things carried out in a certain way and documents look so for a reason. You could say it’s because they hold the gold, so they make the rules. Or, you could say that they’re getting ready to lend. This is the largest chunk of money an individual will ever borrow in her/his lifetime. So they want to make sure everything is in order. Either of those two answers is correct, but the REAL answer is far more simple: they’re covering their butts. Everything they do from the moment they touch a loan application is to make sure blame is not for anything. What must their home lives be like?
In the case of my teacher buying a house, the form he needed had to show the money going out. It also had to show the transactions to show that the account had enough money. The fact the statement showed that after the transfer there was a balance of $XXX should be enough. Evidence there was enough money in the account for the transfer to go through. To an underwriter, they have to show that the account holder didn’t walk in that day. Then hand the money to the teller, and then transfer that money out. Sourcing and seasoning rules don’t allow that, and the underwriter has to make sure of that. The underwriter didn’t make that rule (or any of the rules they’re tasked to follow). Their continued employment depends on their sticking to it. They’re forced to be the devil about the details.
Whether you’re a seasoned real estate agent or a first-time homebuyer, the next time you think the underwriter is being unreasonable or especially stubborn, bear in mind that 99% of the time they’re just doing their jobs – they’re just covering their backsides. If they’re like me, the older they get and the less exercise they undergo, covering that area becomes a bigger job by the day. To borrow a notion from the Rolling Stones, have some sympathy – even if you still think of them as the devil.
Find out exactly what an “Underwriter” is here.
You may also find our page on “Mortgage Terms” interesting.