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Real Estate Division

AMPC 2: Residential Mortgage Underwriting from a Lender’s Perspective

Introduction

This course provides a comprehensive overview of mortgage underwriting, with particular emphasis placed on the co-dependent (and, ideally, cooperative) relationship that exists between the mortgage originator and the mortgage lender throughout this crucial process. Candidates will review the goals, risks and regulations inherent to mortgage investment that influence lenders’ underwriting guidelines, before delving into the specific factors that determine the underwriting process and decision. Finally, candidates will review the measures lenders take to monitor their investments, as well as the broad array of policy decisions and legal remedies available to them when a borrower defaults on a mortgage loan.

Course Outline

Section 1: Understanding the Lender’s World

  • How brokers work with lenders
  • Types of lenders
  • The six 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
  • Lender tips for submitting mortgage files
  • 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

Section 4: Borrowing from a Consumer’s Perspective

  • Suitability – Product and Terms
  • Collateral and Standard Mortgage Options
  • Mortgage Rates, Costs, and Compensation Disclosure
  • Reverse Mortgages
  • Participation Mortgages
  • Borrowing for Residential Construction
  • Prepayment Clauses and Costs

Section 5: A Closer Look at Repayment Plans

  • Borrower and Lender Objectives
  • Interest Accruing Loans
  • Interest Only Loans
  • Straight Line Principal Reduction Loans
  • Constant Blended Payment Repayment Plans
  • Payment Frequency
  • Partial Amortization and Outstanding Balances
  • Variable Rate Mortgages
  • Graduated Payment Mortgages
  • Sinking Fund Assisted Mortgages
  • Addressing Inflation Directly In Mortgages

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