Mortgage underwriting

Mortgage underwriting is the process a lender uses to determine if the risk (especially the risk that the borrower will default) of offering a mortgage loan to a particular borrower is acceptable and is a part of the larger mortgage origination process. Most of the risks and terms that underwriters consider fall under the five C’s of underwriting: credit, capacity, cashflow, collateral, and character. (This is also known in the UK as the three canons of credit - capacity, collateral, and character.) Mortgage underwriting is the process a lender uses to determine if the risk (especially the risk that the borrower will default) of offering a mortgage loan to a particular borrower is acceptable and is a part of the larger mortgage origination process. Most of the risks and terms that underwriters consider fall under the five C’s of underwriting: credit, capacity, cashflow, collateral, and character. (This is also known in the UK as the three canons of credit - capacity, collateral, and character.) To help the underwriter assess the quality of the loan, banks and lenders create guidelines and even computer models that analyze the various aspects of the mortgage and provide recommendations regarding the risks involved. However, it is always up to the underwriter to make the final decision on whether to approve or decline a loan.