Loan approval can change a member’s life and the relationship with a credit union. One of my favorite quotes from Rex Johnson, lending expert and founder of Lending Solutions Consulting, Inc., is, “Lending is an attitude and an approach.”
LSCI’s philosophy suggests that members should not be denied based on a credit score alone. This makes an underwriter’s job one of the most important in the business of a credit union because loans generate a large portion of a credit union’s income. Although much of the process is automated using various number-driven tools, the difference between a member’s approval or denial lies within the skills of a lender and an underwriter. A strong relationship between those two positions will help to avoid a missed opportunity in lending, which ultimately affects the bottom line.
The traits that make a great underwriter include:
- Strong analytical skills
- Math and statistics skills
- Attention to detail
- Verbal and written communication skills
- Good judgment without being judgmental
- A collaborative attitude
For credit unions who have centralized underwriters, loan decisioning depends on effective collaboration between underwriters and lenders. For a lender, this means going beyond filling out the fields of the application and for an underwriter this means looking beyond the numbers. Both must work together as experts in their positions to find the right solution for the member and the credit union. The key to improving the odds of a loan approval is asking the right questions that are not on the application in order to get to know the member better.
Lenders are responsible for asking the member the right questions without any preconceived judgments and communicating the conversation to the underwriter in writing. For example, we see many loans that are turned down because of the debt ratio rather than asking further questions to about additional household income. Underwriters act on the assumption that lenders have done everything they could when that is not always the case, and as a result loan applications are sometimes turned down.
Great underwriters act as mentors, teaching lenders about the key areas that help to effectively decision a loan. This relationship is not a hierarchy but a partnership. Lenders must recognize the needs of the underwriter where good judgment and attention to detail are important. If the underwriter is expected to use the lender’s work to expedite a decision, working together ultimately saves a member’s precious time.
It is important for lenders and underwriters to have respect for each other and work together, as they both have the same goal of helping members. The result of a collaborative relationship exists in the form of note-taking because it shows we are reading between the lines to build more loans to generate more income. This is where great attention to detail is needed and interpersonal skills on both sides become paramount to the loan decision.
