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Fintech Takes

S6 E4: The Nuances in Credit Underwriting that Most People Miss with Frank Rotman

Jan 31, 2024
Frank Rotman, Chief Investment Officer at QED Investors, shares insights on credit underwriting, cashflow underwriting, alternative data, payment protection insurance, and the future of fintech. They discuss distinguishing willingness to pay from ability to pay, accurate pricing of risk, explaining declines, American mortgages, predatory lending, and innovating credit and insurance delivery.
01:31:18

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • Credit underwriting involves assessing different dimensions such as ability to pay, willingness to pay, stability, and collateral for accurate decision-making.
  • Regulations like Reg B can make underwriting challenging by restricting the use of certain data sources correlated with protected classes.

Deep dives

Importance of Understanding Credit Underwriting Dimensions

Credit underwriting involves assessing multiple dimensions including ability to pay, willingness to pay, stability, and collateral. These dimensions help determine a borrower's creditworthiness. While willingness and ability to pay are often the primary focus, neglecting stability and collateral can lead to oversimplification and flawed assumptions. For example, relying solely on ability to pay without considering stability may overlook factors like job stability, cash cushion during emergencies, or past repayment behavior. Considering all dimensions is crucial for accurate underwriting decisions.

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