What is the primary role of an underwriter in mortgage lending?

• A. To verify the property's title
• B. To determine the risk of lending to a borrower
• C. To schedule the closing
• D. To set the interest rate

Answer: (B)

Underwriting in mortgage lending centers on evaluating risk and the borrower's ability to repay. The underwriter analyzes income, employment history, credit history and score, debts, and assets, and verifies documents to determine if the borrower fits the lender's guidelines. They also review the property’s appraisal to ensure the collateral supports the loan amount. Based on this assessment, the underwriter decides to approve, deny, or issue a conditional approval with requirements to be met before funding. This risk-focused step is distinct from title work, which is handled by a title company; from scheduling the closing, which a settlement agent handles; and from setting the interest rate, which is driven by market conditions and loan terms rather than the underwriting decision.