Welcome to peak insanity.
You might ask what does this have to do with underwriting? Great question. Here’s your answer:
Back during the savings and loan crisis in the US (yes, I’m old) I remember seeing lots of lender initiated life insurance applications to cover mortgage debt. The applications were made years after the loans were on the books. One app sticks in my mind. Like any good underwriter I asked for and received a financial statement. The valuation of the real estate seemed high to me. I told the underwriter to decline the case based on inadequate finances. I was questioned on my decision.
One of the properties (there were multiple properties listed on the balance sheet) was in the same city the underwriter lived in. I said go drive by the house and you tell me if you think it’s worth $800,000 based upon appearance and location. The next day he walked into my office.
“It’s an empty lot.”
Hey, at least there are buildings on this $7.2 million property in Vancouver!