From regulatory compliance to corporate governance structure, everyone is involved
Topic: IT Best Practices
Topic: Risk Management
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IT Best Practices
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Mortgage Risk Management 101 was a result of an operational premise that Net profits can be increased by increasing Gross Profits, minimizing the staff and related expenses it takes to properly Manage the resources and place aside unrealistic reserves for the outcome of this shallow analysis.
The Underwriting challenge today is that which is caused by second guessing. The learned Underwriters among them will fall back on the premises set by their evolution and they will need to incorporate "Collection Potential" along with "Reasonableness of Risk".
Loan losses in Mortgage Pools can be diminished by making loans to individuals who are willing to surrender assets as collateral and who can be reasonably expected to pay the obligation over the mortgage period voluntarily and without costly legal action. These type loans will be inhibited by Credit Score driven lending.
I'm no genius but I can tell you this my children could underwite loans to individuals who have valuable bricks and mortar and a good education and savings portfolio.
The test comes to the marginally affluent who may not sustain their present levels of income because of a changing economy.
The answer lies in prudent lending; and, A minimization of the credit score valuation in making a loan, and an eye to the security available and the ability for the borrower to perform on the obligation created.