Q We have been waiting for our loan approval for about four weeks, and are rapidly losing our patience with the lender. The lender (a mortgage broker) keeps telling us that the loan is with the underwriter, and that the delay is not really his fault. Exactly what is an underwriter and what is his function?

A I recently had the privilege of addressing a mortgage banking group, and drew the largest round of applause when I made reference to the "mythical underwriter."

A mortgage broker does not have its own mortgage money to lend out. It brokers its services, by finding lenders who have mortgage money available and matching those funds with individual consumers who want to borrow funds to buy or refinance a house.

The mortgage broker processes all the paperwork, screens and qualifies the borrowers, obtains credit reports and appraisals on the property, and takes care of all of the other requirements imposed by the ultimate lender. Finally, if the mortgage broker is satisfied that the potential borrower is qualified, he sends the package of papers to the "underwriter."

The underwriter basically is an employe or agent of the ultimate lender. That underwriter reviews the package of material in connection with the lender's standards. For example, the lender may not want to lend more than 80 percent of the value of the property for loans over $200,000. That same lender may be willing to lend up to 90 percent of the value of the house for loans under $200,000. This formula is referred to as the "loan-to-value ratio," or LTV, and the underwriter confirms the numbers by checking the appraisal on the house.

Additionally, lenders have certain ratios (standards) that guide them as to whether or not the individual borrower will qualify for a particular loan. For example, lenders may require that no more than 28 percent of your gross monthly take-home pay be used for the monthly mortgage payment. Furthermore, no more than 36 percent of your gross monthly take-home pay can be spent for all of your debts and obligations.

The mortgage broker in the first instance attempts to qualify the individual borrower; then the underwriter reviews the documentation to satisfy the lender's requirements.

In recent years, because of the growing number of mortgage foreclosures, lenders have been tightening up on their loan standards. This has caused significant problems and concerns for many individual home buyers, who do not fit into a particular mold or pattern.

I have run across many who are well qualified to repay their mortgage loans. But because they are self-employed, and only recently went into business for themselves, they do not have a track record that is acceptable to the underwriter.

Mortgage brokers -- and, indeed, the entire mortgage industry -- must make full disclosure of the various underwriting standards and procedures to assure the public that these standards are, in fact, necessary.

All too often, innocent home buyers or refinancers apply for mortgage loans in good faith and go through the entire process with the mortgage broker only to learn months later that the "underwriter" has rejected the loan.

This is frustrating for the consumer and certainly leaves the industry with a credibility gap. Benny L. Kass is a Washington attorney. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed, stamped envelope to Benny L. Kass, Suite 1100, 1050 17th St. NW, Washington, D.C. 20036. Readers also may send questions to him at that address.