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Residential Mortgage Underwriting from a Lender’s Perspective


Underwriters must have an expert understanding of the mortgage underwriting process, including the technical elements of loan qualification as well as the importance of the co-dependent relationship that exists between the mortgage originator and the mortgage lender, and the factors that affect this bond. They must also be highly familiar with the regulatory requirements which govern mortgage lending, as well as their firm’s business goals and underwriting guidelines. Underwriters must fully appreciate the importance of their role in assessing mortgage submissions – i.e. provide critical analysis of information in order to identify and manage risks.

Knowledge of the lender’s process for monitoring its investments once the loan is funded, and the costs associated with mortgage arrears and defaults for borrowers, lenders and brokers, also reinforces the underwriter’s key role in mortgage adjudication..

Course Outline

Section 1: Understanding the Lender’s World
  • Types of lenders
  • The elements of building mortgage loan operations
  • Risk management strategies
    • Loan portfolio diversification
    • Loan pricing
  • Mortgage default insurance
Section 2: The Underwriting Process
  • The five Cs of credit
  • Loan qualification and funding
  • Information collection and verification
  • Enhancing the broker-lender relationship
  • Credit analysis 
  • Verification of security
  • Loan approval
  • Adjustments to financial terms
  • Loan closing and funding
Section 3: Loan Monitoring and Repayment
  • Ongoing mortgage administration or servicing
  • Monitoring loan portfolios and collecting arrears
  • Lender remedies
  • Repayment and discharge

Section 4: The Role of Financial Statements and Tax Returns in Credit Analysis

  • Accounting principles and concepts
  • Understanding the Income statement
  • Understanding the Balance Sheet
  • Understanding the Statement of Retained Earnings
  • Understanding the Statement of Changes in Financial Position
  • Financial statements ratio analysis
  • Forms of business organization 
  • Overview of the Canadian taxation system