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Mortgage Underwriting Outsourcing - A Quick Rundown of the Concept

Have you tried mortgage underwriting outsourcing? This is a common practice nowadays among owners of mortgage lending companies. It entails allocation of the lengthy and difficult process of underwriting to an external worker. When a borrower applies for a loan, on the internet or at a local bank, their request is received by loan officers on behalf of a lender.


Loan officers then begin to carry out the loan origination process. They receive application forms and request necessary documents that would help them pre-approve or drop some loan applicants.


When an application form is pre-approved, it is forwarded to the next stage of underwriting. This can simply be explained as the task of determining the creditworthiness of a house loan applicant. Mortgage underwriting outsourcing makes this task easier, cheaper and quicker. The technique is being used by large and small banks to lower their daily overheads. Does this make sense to you? When a bank outsources its underwriting process to an independent outworker, it automatically saves its office resources, time and money.


This is because underwriters from outside do not require any support from their clients. They have large teams of professionals who approve or reject loans very quickly. Mortgage underwriting outsourcing can be applicable in today's unstable economy where inflation has become a common threat to businesses. During inflation, companies that are not aware of outsourcing strategy lay off their workers to survive. There is no need to wait until this happens. You can let go of redundant staff right now in favor of mortgage underwriting outsourcing. You could also shift them to other departments or stages of loan origination process.


It is never too late to change the way you run your lending institution. A practical change such as introducing mortgage underwriting outsourcing will produce sweet fruits in the near future. Since underwriters establish the plan for recovery of money in case a borrower defaults in the future, you must choose them cautiously. It is wise to engage a local mortgage processing firm that has many positive reviews and years of experience. Additionally, you must focus on hiring an external underwriter that processes similar loans as yourself. For instance, if you process VA home loans, search for an underwriting company that can handle them.


The only major requirement a mortgage underwriting outsourcing company will demand from you is a service fee. Some companies pre-set their service fees while others are willing to negotiate rates with you. It is up to you to select the company you want. Even as you hire an outsider to underwrite your loan contracts, you need to make some vital decisions. For example, you have to decide if you will be the bridge between your customers and the third party underwriters. If you want to stick between them, then get ready to communicate and give feedback. The other arrangement involves letting your outworker communicate directly with loan applicants. Like many people, you might fear that an external underwriter could request your customers to stop giving you business. This cannot happen because these professionals are only in the business of mortgage underwriting outsourcing.


For more information you can consult our experts at C.L. King & Associates.
C.L. King & Associates is a full-service investment bank and self-clearing broker-dealer founded in 1972. When combined with our strong capital base, we are an active securities underwriter. We co-manage bond offerings, IPOs, follow-ons, secondaries, convertibles, and preferred
Also read here: Outsourced Loan Underwriting Benefit for Small Mortgage Lenders

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