A mortgage underwriter is a mortgage professional whose job is to determine the level of risk that a borrower might default on a mortgage loan. Often times, this is a person who is specifically dedicated to this task; they often never really interact with the borrower in person. Instead, they review various factors that will lead to approval/disapproval of the loan, such as the borrower's:
- Income and credit history
- Debt issues
- Savings amounts
Underwriters might also perform other tasks to ensure that a loan deal comes together on time. They might review tax and title documentation to make sure they meet guidelines. They may also be involved in the home appraisal process. Underwriters are involved with many different loan aspects; therefore they can also be subject to liability on a number of different matters.
What Is Mortgage Underwriter Liability?
Mortgage underwriter liability refers to the issue of an underwriting being responsible for losses caused to a borrower. This can often involve issues like fraud, misrepresentation, unfair business practices, false advertising, and other related claims. Liability can lie with the individual professional, or with their whole company, depending on who authorized a certain action.
One of the main concerns is where a mortgage underwriter unlawfully approves a borrower for a mortgage loan that they are unqualified for and really should not be receiving. This can happen either with or without the borrower’s knowledge (though in most cases, the borrower is “in on it” as well).
Legal Consequences for Mortgage Underwriter Violations
Mortgage underwriter violations may result in consequences like:
- Loss of practice license
- Civil fines
- Criminal consequences for serious violations and federal offenses (may result in some jail or prison sentencing)
Borrowers can aim to avoid being a victim of mortgage fraud by researching a company or particular professional before engaging in a deal with them. They should also report any suspicious activity or policies to the appropriate authorities.
Seeking Legal Help for Mortgage Underwriter Issues
Mortgage underwriting is one of the most important aspects of the home purchase process. The underwriter plays a major role in the approval or rejection of the borrower’s application. If you have any issues or legal disputes involving a mortgage underwriter, you may wish to hire a qualified real estate lawyer in your area. Your attorney can provide you with legal advice and can also represent you in court if you need to file a lawsuit.