Underwriting job sucks like mine or is my company just worse?

Im an underwriter for a GSE shop like Arbor, Hunt, Walker Dunlap, Greystone etc. Is it just my firm or are all GSE underwriting jobs like this... i get shitty properties around the country, class b and below, where i constantly have to go back and forth with the appraisers to try and make the deal size because either the screeners/sizers suck and are to aggressive or whatever other reason. The sponsors suck and never get diligence in on time or they have other issues that create headaches.

I see underwriters on here say they just plug numbers and its easy. I feel that im constantly dealing with headaches and overly frustrating problems on every single deal and i feel that the salary is not worth it.

Thoughts on underwriting? also any idea how i can become an underwriter at a firm that handles better assets?

 

A little bit of both? But underwriting can also be a drag at times. Most people entering the industry seem to think underwriting real estate means "modeling" or "financial engineering" but for the most part underwriting is qualitative. Its collecting due diligence items, chasing down various parties for the items, reviewing the appraisal, ESA, PCR, putting together a summary of all three reports along with overall transactions strengths and weaknesses, going back and forth with the appraiser or the engineer so that your deal pencils out. Sometimes, your literally arguing with the engineer to have them reduce the recommended reserves by .02 or .03 PSF, its literally pennies. You will often go back and forth with the insurance broker, counsel at times and answer all the Q's from the risk and credit folks, it can feel like your running around in circles. However, I am not sure I agree with the other comment about going to a balance sheet lender. Sure, you might see better assets and sponsors, but for the most part your problems with underwriting- which appears to be the entire process of going back and forth with the various parties will remain even at a balance sheet lender. And in my opinion, more than the agency shop, the credit and risk committee at a balance sheet lender will absolutely put you through the wringer.

Have you given production a shot? If you are an underwriting analyst, you can also be a production analyst. I was previously in underwriting. I liked it but realized that I liked production a lot more, so I now work in production and cannot see myself doing anything else. Underwriting is a fine role, you get paid well, have more stability and imo underwriters can also transition to being asset managers so you get more flexibility. But, I am a deal junkie, I like working on new deals, working on new business, meeting people and building relationships instead of reading leases and third party reports all the time, so for me production is a better fit.

 

And underwriting analyst supports UW's, a production analyst supports producers. Some shops just have an "analyst" who does both. A production analyst sizes deals ( I oftens size 2 or 3 deals a day), uses a custom built model to check feasibility of a deal based on the lender's specific requirements, communicates feedback to the producer, helps structure the deal, works on different pricing strategies and checks to see how different pricing affects the loan metrics, prepare questions to the broker/sponsor, and update the sizings once I get the answers and often work through the risks and mitigants of the deal with the producer. I work on the cmbs side, so on top of doing everything I mentioned, once the deal has gone through a decent amount of underwriting, I then work with rating agencies, B buyers and make sure our loans are treated fairly and I assist with the securitization process and through the entire process as the NCF changes, I keep an eye on the loan level loss as that helps determine whether we make any money or not on the loan

 

Not to put down underwriters as I used to be one at a top 3 agency shop, but there sre better careers out there with better “pay and more stability”. If you’re young and ambitious, don’t give up on your dream to move on to better roles either in private equity or development or whereever it may be.

That being said, underwriting can still be a fine career. But the frustration you mentioned will be there until you make it to chief underwriter level who just sits in on committees all week. Running around arguing telling third party reports to fix tiny errors will be a key part of of yor job unfortunately.

Go chase your dream and good luck!

Array
 

I've been on WSO since ~2010. Lurking if not actively posting. The one thing that I have noticed is the increased in RE focused material on the site.

Not complaining - just curious why.

 

A lot of people who didn't end up in finance end up in real estate (...lower barriers to entry). Also, real estate is becoming more institutionalized and taken on as a serious asset class; as a result, more jobs are coming into play and people are asking more questions.

Not to mention, the industry roles are relatively similar (i.e. OMs vs pitch books, banker vs broker, PE vs REPE) so it makes sense that RE people would see the benefit in exploring a finance site such as this one.

 
Most Helpful

My $.02 is that underwriting is extremely uninteresting. As others have said, there's little to no modeling/financial engineering and the time that you do spend modeling amounts to 1/10th of the time that you spend dealing w/ punch-list items (ESAs, PCRs, appraisals, pulling comps, & other DD items). Honestly, it's a job that favors ppl who are good at managing & staying on top of action items in a fairly repetitive process more so than one that favors ppl w/ solid finance chops. This isn't a knock on underwriters, although I'm moving on in a few months, that's currently what I do.

As OP said, dealing w/ unresponsive Sponsors is an enormous pain in the balls. These fuckers drag their heels on everything, then get pissy when the deal isn't ready to close. It'd be ready to close if you had bothered to submit current financials, survey, insurance certs, SNDAs from your tenants, and the 20 other things you've been told need to be submitted before we can close, fuckstick. They're only slightly more annoying to deal w/ than the originators who never saw a deal they didn't like and think that their 60% occupied, class C strip center in Des Moines, which (i) will reach 1.0x coverage if it ever reaches stabilization...with 10% above market rents, (ii) will be 80% LTV at stabilization, w/ said bullshit rents, if you use a cap-rate that I can only surmise they pulled out of their ass and has no basis in reality (iii) has no credit tenants, and (iv) has a Sponsor with a history of fraud, is a "can't miss".

I come from down in the valley, where mister when you're young, they bring you up to do like your daddy done
 

If you want an easier underwriting gig, move into a role where you’re underwriting larger loans. This may be counterintuitive but getting small deals closed can be an absolute pain in the ass. Sponsors have less experience, sellers may be less sophisticated, market data isn’t as good, etc.

Underwriting $50MM Freddie loans for Gables Residential will be way less brain damage than $2.0mm Freddie SBL.

 

Objectively, small loans are less profitable which ultimately means the company has less money to pay out via bonuses. I've worked on both large and small loan lending and would never go back to small loans. You end up doing 5x the amount of work it takes to close a large loan, with less money to show for it. It's a flawed business model.

 

Your job is stable and steady, but boring. I used to do this work as a side hustle at a competing brokerage, so I understand the form filling bureaucratic nonsense.

If you want to get into a more creative environment, get Argus certified and learn waterfall modeling. Understand mezzanine capital, participating mortgages, securitization, and other concepts so you can interview with CMBS lenders, debt funds, etc...

You should be able to get interviews if you prepare adequately.

 

Do you have any recommendations on how to learn Argus for cheaper than through their $1K course? I'll shell out the money if I have to since at least I'll be investing in myself, but just wondering if there's a cheaper way.

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.
 

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