Underwriting in an Age of Uncertainty: Why Human Judgment Still Matters

There’s a saying in the mortgage world, borrowed from the Eagles’ Hotel California: that you can check out any time you like, but you can never leave. For many of us, that lyric isn’t just clever; it’s autobiographical. I’ve tried to step away from mortgage lending more than once, yet the industry always calls me back. Maybe it’s the complexity, maybe it’s the mission, or maybe it’s something deeper: the fact that underwriting still sits at the intersection of data, risk, opportunity, and human stories.

Today I lead underwriting at Fairwinds Credit Union in Florida, where we lend across much of the country and are preparing to reach all 50 states. Before this, I spent years in IMBs, big banks, non-QM shops... long enough to go toe-to-toe with anyone on mortgage war stories. And yet, after all these years, I remain passionate about the core work of underwriting. At its heart, it’s a puzzle. Every file has a narrative; every borrower has a context; every deal requires balancing risk with possibility. It’s always easier to say no, but it’s far more meaningful to find a responsible way to say yes.

In a housing market defined by volatility, scarcity, and accelerating innovation, underwriting is becoming more central, not less, to the future of homeownership. But for lenders to adapt, we must confront a set of barriers and rethink the role underwriting plays in helping the next generation of borrowers access homeownership in new and unconventional ways.

Why Underwriting Change Is So Hard

People often ask: If lenders know the market is changing, why don’t underwriting guidelines change faster?

The answer, unsurprisingly, starts with regulation. Any guideline shift must still comply with federal and state frameworks, and these processes rarely move at the speed borrowers (or lenders) would like. In a world where consumers expect near-instant everything, underwriting remains one of the few domains where deliberation still matters.

Operational barriers add another layer. Systems must be updated, workflows re-engineered, teams retrained, and quality controls reassessed. And hovering above everything is the fear factor: no lender wants to loosen guidelines only to face higher defaults or costly buybacks. So yes, change happens. But it happens thoughtfully, not recklessly.

The Industry’s Responsibility to Educate

Many Americans don’t know they can build a custom home with a construction loan. They don’t know tiny homes are financeable. They don’t know manufactured homes have evolved dramatically. And they certainly don’t know that 3-D printed homes exist, and have entire communities in places like Texas.

If people don’t know what’s possible, they won’t ask.

Lenders must be proactive: hosting webinars, creating clear educational guides, and training our own staff to speak confidently about alternatives. The industry has historically relied on borrowers to come to us with questions. That approach is outdated. Today’s lending environment requires outreach, transparency, and intentional empowerment.

And as housing types diversify, underwriting must, too.

Flexibility Without Recklessness

One of the most powerful tools an underwriter has is open-mindedness. That doesn’t mean lowering standards; it means recognizing that risk looks different depending on context.

A log cabin in Miami? A problem. A log cabin in the Carolinas? Completely normal.

A barndominium may look like a warehouse to some, but in many regions it’s a cost-effective way to build. A 3-D printed home may seem untested, but entire neighborhoods are operating successfully.

The key is marketability and comparables, not familiarity. The fact that you haven’t seen something before does not mean the market hasn’t.

Underwriters must be willing to explore rather than automatically refuse. The future of housing will not look like the past, and underwriting practices must evolve accordingly.

AI, Automation, and the Future of Underwriting

Whenever technology accelerates, people start predicting the demise of the underwriter. It happened when DU and LP emerged in the 1990s. It resurfaces every few years. And now, with AI, the question is louder than ever: Will underwriting become obsolete?

I don’t believe so.

AI will make us smarter, faster, and more consistent. Automated verification of income and assets will become standard. Data ingestion will accelerate dramatically. Rules-based tasks will become more efficient. But there is one thing AI cannot replicate, at least not safely: human empathy.

Underwriting is not just math. It’s narrative analysis. It’s pattern recognition. It’s understanding when a borrower’s story makes sense and when it requires deeper inquiry. It’s the ability to weigh exceptions responsibly. Empathy is not a soft skill in this industry; it is a risk-management skill.

There are policy frameworks emerging, focused on regulating AI in financial decisions, and these will help shape the next era of lending. Some regulators are even exploring fully automated underwriting determinations, which carry both promise and peril. But as long as human lives are shaped by these decisions, human judgment must remain a differentiating force.

What Comes Next

The next three to five years will reshape underwriting more than any period since the GSEs introduced automated underwriting systems. We’ll see:

• AI-enhanced risk assessments that make file review faster and more consistent

• Digital VOE/VOA as the baseline, not the exception

• A rise in alternative housing types, driven by affordability pressures

• Growing expectations for lenders to educate consumers, not merely serve them

• More portfolio lending and credit-union leadership in non-traditional mortgage solutions

• Regulatory experimentation, some of which may fundamentally alter how decisions are made

But even as the tools evolve, the mission stays the same: help people become homeowners responsibly, thoughtfully, and with the full weight of human judgment behind each decision.

The Final Word

Underwriting may never be glamorous, but it remains one of the most consequential roles in American homeownership. The challenges ahead (e.g., affordability crises, emerging home types, regulatory complexity, and technological upheaval) will not be solved with automation alone. They will be solved by people who understand that every loan is both a risk and a story.

And that’s why so many of us, despite the long hours, the stress, the regulatory shifts, and the constant industry reinvention, never truly leave this field.

Because when you help someone buy a home, you’re not just approving a loan. You’re opening a door.