Agency Production vs UW
Currently work at an agency lender on an MB team as an analyst at one of the big(gest) brokers. I notice the other big shops (CB, Walker) have split roles between UW and Production analysts, where production analysts work directly under the MB and help with sizing/screening/requesting quotes while the UW team takes it after application to actually go back and forth with Freddie/Fannie on UW, intentionally trying to keep the MB team out of this step. In our shop, the production analyst does both roles, handling everything from initial correspondence with the sponsor through UW with the agency all the way to delivering the commitment. Guess we are trying to get with the times as now we are setting up UW teams that we will hand off the files to after application is signed up. My question - is this a concern for an analyst? Essentially you are losing half of your job and a good chunk of the actual "weeds"/underwriting. Also, which side is it better to be on? Imagine production as you get more facetime with the client and are closer to the moneymakers but seems you do less "work" than in UW. Thoughts?
I think each approach has its pros & cons, although I do prefer one over the other.
Not sure if we're at the same shop, but I came up doing production + UW w/ Freddie & delegated UW teams with Fannie. I think there's a ton of value in understanding the credit side of things; however, it seems like the industry house view is that there is too much risk of a conflict of interest to fully delegate UW to production teams.
Instead of spending time on processing, you'll now have to retool and learn how to motivate & influence people (UW teams, who, by nature, will be more conservative) who also don't have a direct interest in getting you the best economic outcome.
It feels like non-bank agency lenders are trying to pivot and behave more like traditional banks, and that unfortunately may be just be an unavoidable consequence of there being more scrutiny around topics like mortgage fraud. Add to the mix that regulators may start implementing AI tools to ensure that we are following the agencies' guides to a T (total conjecture), and these changes start making more & more sense.
In conclusion - consider yourself lucky that you got to sharpen both client facing & credit skills while you could. I think you'll find that you still will have plenty to do on deals, but it's going to be a lot of following up with people & working to educate them on the nuances of the deal that you previously got to own.
Thanks for the input, which side do you prefer? Assuming production being that is your background, are you a producer now?
Yes I get lenders need to prevent conflict of interest, just makes things very difficult as an analyst when your banker is yelling at you to push proceeds, so you have to go to Fannie/Freddie, who are already extremely programmatic, and find efficiencies somewhere to come up with extra dollars. Now insert a middleman (UW Team) who you have to convince to fight your fight to the agencies for you, and they end up pushing back on you more than the agency would. No joke had a deal where they submitted a property value several million dollars under appraised value because they felt it was more "realistic". Like damn, guy has an MAI for nothing I guess. Not to mention it was our best client, who has closed over 1B in agency debt. It's like UW don't get selling debt is what we do for a living, where do they think their salaries come from? end rant
Yeah this is exactly right. The pay is better on the production side though
There are probably 3-5 things in entire post that made me LOL. Sounds like your broker is throwing a tantrum! I'm sure Fannie and Freddie will be fine if he wants to source other capital for his client.
Sorry this took so long to respond to lol.
I've never been in UW per se - just operated in the capacity of an UW when doing Freddie deals. I personally prefer being able to work directly with the agencies. I've developed pretty strong relationships with various credit folks over the years, so it feels stupid to throw away that relationship capital in exchange for the types of situations you described above.
That being said, I probably do spend too much of my time in the weeds on various transaction issues but I also truly believe it results in better outcomes for our clients.
That scenario you described is insane and also way too relatable. Glad to know it's industry wide (unless we're at the same company).
There are new rules regarding many aspects of UW and correspondence with brokered transactions as well. So to mitigate the rules and eye from above, many Agency lenders easily just hand off the package once the pre-screening is done. It's not as stringent for direct originations but getting there.
I wouldn't worry if rates tick down and we can get originations back up. JLL top shop though don't know about that.
Experienced Agency folks- how do you view working at a non bank vs bank? If you are at a bank doing agency lending, particularly a bank that has a strong agency business and large balance sheet so there is a steady pipeline of repeat and referral clients for takeout opportunities, seems like a good place to be and ride it out for 20+ years? If you are not in a production role, a good base plus bonus combined with the work life balance makes it seem like a good gig compared to the non banks that can never provide the same base salaries as the banks.
Agency UW if you want stability long-term (profile may be someone with a family, kids, looking for a stable decent paycheck) and don’t want to be in a client-facing sales role, okay with doing the same thing over and over. UW and production are basically the same thing - both of you are putting together a proforma that needs to be approved. Production may be more involved as it relates to going over what terms, where rates are, etc. but honestly, the models are at a point where all you have to do is plug in some data points and your quote sheet will spit out every loan type available with all the bells and whistles for both agencies.
Production - higher monetary upside as your compensation will likely be tied to a waterfall structure. If you’re in a bullpen, some % of what deals are closed split across analysts. Varies from shop to shop.
Also better fit for someone who is a deal junkie. Someone who wants to go to all the net working conferences, meeting the big players, and generally interested in getting deals done, etc.
If you work on a specific team, really just depends how productive your team is. If the main producer is a “rainmaker,” probably going to be a good year for you. Clearly $200K+, $300+ depending on market and splits. This really varies on what waterfall agreement you have, and whether you are expected to be the numbers guys (doing the sizing and point of contact with the UWers), or if you are going to be expected to bring in your own deals eventually. They’ll give you some soft leads to close here and there, but you’ll be expected to cold call/email a ton as well.
Referencing Microsoft’s list of the 40 jobs most likely to be replaced by AI, sales representatives of services ranks #4 most likely. I understand selling commercial loans is different than selling a software/service, but can’t help but think that it’s a threat, especially considering most people view agency loans as a commodity already. A counter point to that is I don’t imagine someone wanting to transact with an AI agent, but my concern still stands. Anyone else thinking about this?
Ya idk loan broker is as likely to get AI'd as any other white collar job ig. Agency UW will be automated FAR faster, that job requires like a HS degree max
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