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There is no direct way to obtain experience in loan underwriting during high school, but you can obtain a general introduction to the world of business and finance by joining related school clubs and reading National Mortgage Professional Magazine (https://nationalmortgageprofessional.com). During college, try to land a job as a bank teller and participate in an internship in the loan department of a bank or credit union. Additionally, talking with underwriters will provide an excellent introduction to the field.
Money to help a young couple purchase their first home. A loan to help buy a new car to replace that rusty “beater.” Funds to help a disadvantaged student attend college. A business loan to help the owners of an Italian restaurant open a new location. These are just a few of the types of loans that people seek to improve their lives. Loan underwriters play a very important role in the loan process. When they approve a loan, dreams can be turned into reality. Of course, not all loans are approved. Loan underwriters must also reject some loan applicants in order to protect their employers from the risk of financial loss. Job duties for loan underwriters vary by employer and type of loan, but most perform the following duties:
- obtain and analyze credit reports and verify credit information
- review financial assets held by the borrower, including savings/checking accounts, stocks, retirements funds, etc.
- determine debt to income ratio, collateral valuation, and general loan quality
- review all supporting documentation for accuracy and compliance
- perform a financial risk analysis that assesses the interest rate risk (losses that may occur if interest rates fluctuate), default risk (the potential that a borrower may default and be unable to repay the loan), and pre-payment risk (the likelihood that the borrower may pay off the loan before it matures—reducing earnings for the lender)
- make a decision on whether to approve or reject a loan application
- create specialized loan rules for applicants with a poor credit record, but who have strong employment histories and demonstrate a strong ability to repay the loan; these include increasing the amount of their down payments and/or their interest rate
- generate a risk report that explains why the loan risks are within the lender’s guidelines for approval, or how they fail to meet the guidelines
- refer loans above their employer’s established lending limit to senior management for approval
- interact with the loan processor and other loan professionals, as needed, during the loan application process
- assist with the re-negotiation of loans, as necessary
- act in accordance with regulatory and compliance requirements that include, but are not limited to, Anti-Money Laundering and Terrorist Financing Reporting requirements, the Real Estate Settlement Procedures Act, and the Fair Credit Reporting Act