Have you ever applied for a mortgage loan with a loan officer and they said something to the effect of “this will of course, be going to our Loan Committee?” If you did, then it was most likely about the same time as when Steve Martin did stand-up comedy routines. The days of Loan Committees are long gone. Now, your loan goes to an underwriter, right? Maybe not. Maybe it goes from your Loan Officer's desk straight to their Closing Department, bypassing Underwriting together.

The typical mortgage application process goes something like this:

1. Apply for a mortgage with a mortgage loan officer.
2. Your loan officer collects standard items such as paycheck stubs, W-2s and the Sales Contract.
3. The loan is processed and documented for forward to the Underwriter, who (hopefully) approves your application. This process could take up to 30 days.

The advent of Automated Underwriting Systems in the mid-90s began to alter that scenario, but the loan still had to be sent to an Underwriter. Instead of taking the mortgage application, documenting and processing that file for forward to an Underwriter, the application instead is entered into an Automated Underwriting System - a software program that reviews loan applications - for a decision. Once that decision is reached -usually within seconds- the software program make list of required documentation needed to fund the loan. Upon receipt of these listed items, they are forwarded to an Underwriter who makes sure that what the software program asked for is what you documented. This process can cut the loan approval time in half.

But what if you didn't need an Underwriter? What if you could apply for a mortgage with the same person who will be issuing your approval, bypassing another Underwriter completely? Now we're talking mere days to approve and fund a loan. How can this be? How can you avoid being underwritten entirely? You can't. At least not exactly.

A trend among mortgage companies is to train their loan officers to also be Underwriters. Instead of completing an application with one person only to have it go through additional steps takes up more time, some loan officers are authorized to issue a loan approval themselves. How do they do it?

First, not lightly. Loan Officers who have the authority to “sign off” on mortgage loan conditions go through some rigorous training. Is the training good enough to replace an Underwriter who's been reviewing mortgage loans for the better part of the last century? Of course not. But that's not their goal. The goal is to be able to approve mortgage loans that are most common, typically conventional mortgages using Fannie Mae or Freddie Mac guidelines. But you can expect that to change as well.

Using a Loan Officer who also approves your loan can input your application into the Automated Underwriting System, receive the instructions - loan conditions - then document the application per the Underwriting System guidelines. If the loan condition asks for last year's tax returns, the loan officer will get the tax returns, make sure they conform with the request and move on. Now, instead of collecting information for an Underwriter to sign off, the Loan Officer can do it themselves.

How can you find out if you Loan Officer can also approve your loan? Ask them. But be careful, there's a big difference between a Loan Officer who can “approve” your mortgage loan and one who can “sign off” on all your loan conditions, bypassing the underwriting department completely.

There are huge advantages when you work with a Loan Officer that has the ability to truly “approve” your loan from their desk top to your Attorney or Settlement Agent. Now when your Loan Officer says “you're approved,” you're approved. Get used to it. It's a good thing.

Published: January 20, 2003

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, a veteran Mortgage Banker, successful Real Estate Consultant and author of Your Guide to VA Loans, Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan, Who Says You Can't Buy a Home!, and Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, is a former columnist and Contributing Editor with San Diego-based Mortgage Originator Magazine. Reed is President of CD Reed Mortgage Bankers, Austin, TX and is a Past President of the Austin Mortgage Bankers Association.