Underwriting is the verification and risk analysis stage of the lending process. A professional underwriter (or Automated Underwriting System like Fannie Mae Desktop Underwriter / Freddie Mac Loan Product Advisor) rigorously examines your loan application to ensure it meets federal lending guidelines and secondary market investor standards.
Underwriters evaluate the Three C's of Mortgage Lending: 1. Credit Reputation: FICO credit history, payment reliability, public records, and recent hard inquiries. 2. Capacity (Ability to Repay): W-2 forms, tax returns, bank statements, employment verification, and Debt-to-Income (DTI) ratio. 3. Collateral: Real estate appraisal, title search, flood zone status, and Loan-to-Value (LTV) ratio.