By Laurie Spira, Chief Compliance Officer, DocMagic, Inc.
Underwriting processes vary from lender to lender, but it’s often said that four C’s are at the heart of every sound underwriting decision: credit, capacity, cash and collateral. Even in the wake of the financial crisis, a quick Internet search will reveal that the four C’s still are alive and well; they’re discussed on countless websites and blogs, and almost any mortgage bank or lender will be familiar with the nuances of each of these all-important C’s. Although much has changed in the mortgage industry, the core underwriting principles have remained the same — at least they have thus far.
Depending on whom you ask, the Dodd-Frank Wall Street Reform and Consumer Protection Act’s ability-to-repay rule may come to replace at least a few of the four C’s. Because underwriting is such a vital facet