The Top Ten Underwriting Mistakes

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The Top Ten Underwriting Mistakes!

• Based upon analysis of
• over 4 billion
• in BHPH loans by

Subprime Analytics
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Mistake 1

• Not determining that your installment contracts
  and documents are compliant with all the
  applicable laws and regulations. (Making legal
  and regulatory mistakes can bring you down!)

3
Mistake 2

• Not properly matching the customer, the vehicle,
  and the deal structure when granting credit.
  (Selling a customer the vehicle they want instead
  of the one they can afford!)

4
Mistake 3

• Not running a credit bureau report prior to
  granting credit. (Initially saving a few dollars
  ends up costing you millions!)

5
Mistake 4

• Emphasizing sales growth over good underwriting.
  (Growing too fast can be fatal!)

6
Mistake 5

• Not independently (separate from the sales
  function) verifying stipulations or customer
  applicant information. (There is an inherent
  conflict of interests between sales and good
  underwriting practices!)

7
Mistake 6

• Not learning from your losses! (Making trial and
  error mistakes can cost you millions!)

8
Learn From Your Losses!
Analyzing Your Portfolio Helps You Avoid Trial
and Error Mistakes.
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Mistake 7
Extending the term of the loan in order to meet
the customers payment requirements. (In BHPH,
time is your enemy!)
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Mistake 8

• Letting a large down payment (like a tax refund)
  make the deal instead of making the deal better!
  (Confusing down payment with repayment!)

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Mistake 9

• Not properly managing portfolio risk by adapting
  to changes in economic conditions. (Dealer
  education, reading and networking are your best
  defenses here!)

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Mistake 10

• Not using credit scoring or deal stipulations to
  make underwriting decisions consistently.
  (Frequent changes in underwriting policies and
  practices can be very costly!

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How To AvoidThese Mistakes

• Now
• Ingram Walters
• and Fran Chatman
• will discuss