Tell me about a time when you had to recommend a loan approval or denial. How did you make your decision?

Mortgage Underwriter Interview Questions

Sample answer to the question

I had to recommend a loan approval or denial when I was working as a Mortgage Underwriter for ABC Bank. One time, I received an application from a potential homeowner who had a low credit score and a history of late payments. I thoroughly analyzed their financial information, credit report, and income documents to assess their loan feasibility. Based on my evaluation, I concluded that approving the loan would pose a high risk for the bank. I recommended denying the loan, but I also provided suggestions for the applicant to improve their credit score and financial standing. I communicated my decision to the loan processor, originator, and senior management, explaining the reasons behind it. My decision was based on the bank's underwriting guidelines and regulatory requirements.

A more solid answer

During my tenure as a Senior Mortgage Underwriter at ABC Bank, I encountered a loan application from a potential homeowner with a low credit score and a history of late payments. To make an informed decision, I conducted a comprehensive analysis of their financial information, credit report, and income documents. I followed the bank's underwriting guidelines and regulatory requirements, ensuring compliance at every step. After evaluating the applicant's loan feasibility, I concluded that approving the loan would pose a high risk for the bank. I recommended denying the loan, providing a detailed explanation to the loan processor, originator, and senior management. Additionally, I suggested measures the applicant could take to improve their credit score and financial standing, thus increasing their chances of future loan approval. By effectively communicating my recommendation and supporting it with concrete evidence, I ensured a fair and efficient mortgage process for both the bank and the applicant.

Why this is a more solid answer:

The solid answer expands on the basic answer by providing specific details of the loan scenario, such as the applicant's low credit score and history of late payments. The candidate demonstrates their proficiency in analyzing financial information, credit reports, and income documents. They emphasize their adherence to underwriting guidelines and regulatory requirements, ensuring compliance throughout the process. The candidate also highlights their role in recommending denial and providing suggestions for the applicant's improvement. The answer effectively showcases the candidate's knowledge and skills related to the job description.

An exceptional answer

As a Senior Mortgage Underwriter at ABC Bank, I encountered a complex loan application that required careful consideration and analysis. The applicant had recently experienced a significant decrease in income due to a job loss. To make an informed decision, I conducted an in-depth review of their financial records, including tax returns, bank statements, and employment history. Additionally, I contacted the applicant directly to gather more information about their job prospects and plans for financial recovery. Based on my thorough analysis, I determined that approving the loan at that time would pose a high risk for both the bank and the applicant. I recommended denying the loan, but I didn't stop there. Understanding the importance of providing guidance, I offered the applicant options to improve their financial situation, such as seeking additional employment or revising their budget. I also advised them to explore government assistance programs that could provide temporary relief. By going above and beyond in my assessment and offering practical solutions, I ensured that the applicant not only understood the denial but also had a clear path forward to potentially secure a loan in the future.

Why this is an exceptional answer:

The exceptional answer goes beyond the solid answer by presenting a more complex scenario that showcases the candidate's ability to handle challenges. The candidate demonstrates exceptional analytical skills by thoroughly reviewing detailed financial documents and proactively seeking additional information from the applicant. They show empathy and a deep understanding of the applicant's circumstances by providing personalized guidance and suggesting practical solutions to improve their financial situation. The answer highlights the candidate's commitment to ensuring a fair and considerate process for the applicant, aligning with the job description's emphasis on mitigating risks for the institution while being attentive to individual circumstances.

How to prepare for this question

Familiarize yourself with underwriting guidelines and regulatory requirements specific to the mortgage industry. Stay updated on any recent changes.
Practice analyzing financial information, credit reports, and income documents to assess loan feasibility. Develop a systematic approach to ensure accuracy and efficiency.
Enhance your communication skills, both written and verbal, to effectively convey your recommendations and explanations to stakeholders involved in the loan approval process.
Research government assistance programs and resources that can potentially aid applicants in improving their financial situation.
Think about how you can demonstrate empathy and understanding towards applicants while making objective decisions based on risk assessment and compliance.
Be prepared to provide concrete examples of times when you recommended loan approvals or denials and the thought process behind your decisions.

What interviewers are evaluating

Analytical and decision-making skills
Attention to detail
Understanding of underwriting guidelines and regulatory requirements
Communication skills