It raised concerns about the adequacy of China's regulatory controls, the quality of underwriting and the pricing of risk.
This new model not only increased the quality of underwriting analysis but was also able to give more loans to people.
As Merrill explains to me, Hilbert increases the quality of underwriting analysis and is able to give more loans to people.
By the same token, "Bowen repeatedly expressed concerns to his direct supervisor and company executives about the quality and underwriting of mortgages that CitiMortgage purchased and then sold to the GSEs".
Andrew Davidson, a structured-finance consultant, suggests an "origination certificate", guaranteeing the quality of the underwriting, issued by the lender and broker, which stays with the loan.
Note that the poor quality of the underwriting by Chinese banks that financed a huge overinvestment in the economy–has been hidden for the last few years by the high growth of the economy.
[F]raud was not only present, but, in most cases, could have been identified with adequate underwriting, quality control and fraud prevention tools prior to the loan funding.
I couldn't find anyone that indicated that there was this big red button that gets pushed and completely blows up a transaction based upon underwriting quality," Gerspach said.
"[P]eople are worried about not just the documentation issue but the poor quality of the underwriting of the loans," Mitchell said about Citi's loans that were ultimately securitized and sold.
The underwriting service quality is an essential element in determining the corporate reputation of life insurance businesses and helps in maintaining an advantageous position in a competitive market [16].
