Underwriting Variances and Exceptions

The Underwriting Variances and Exceptions Report conducts test for discrimination based upon the rules of individual Loan Programs. Each Loan Program has specific rules that provide guidance to underwriters in analyzing borrower's credit risk. Underwriting guidelines are usually deemed to be flexible and exceptions can be made. These exceptions, when granted result in an originated or closed loan. The purpose of the report is threefold. First, to determine whether underwriting variances and exceptions vary by protected class. Second, to determine whether variances and exceptions granted are justified. Third, to provide insight into actual underwriting reality versus underwriting guidelines.

In order to perform an underwriting variance and exceptions analysis loan program credit criteria must be quantifiable. Certain aspects of the lender's underwriting are judgmental. These judgments need to be converted to specific numerical criteria. If this cannot be done, then test for variances and exceptions cannot be produced.

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