I have a question regarding the increase of an approved loan amount that is performed by the loan funder, or an individual other than underwriter. At a small community bank where I previously worked, an increase in an approved loan amount required a review and "re-approval" by an underwriter in order to close on the loan. This was required even if the loan amount increased by a penny. However, now at a much larger institution where volume is significantly higher, the individuals responsible for funding the loan are given a threshold with which they can increase an approved loan amount. (For example, an auto loan is approved by an underwriter for $25,000. When the purchase order comes in, the amount needed for the purchase is actually $25,850 (roughly a 3-4% increase).)

If the new loan amount is within their allowable threshold limit (% or dollar amount) they are allowed to essentially approve the increase without sending it back to an underwriter for "re-approval". These individuals have no lending authority granted by the credit/lending policy. The threshold granted is typically around 5% of the loan amount.

Is this a normal practice, or does anyone have any concerns with this practice? I can't seem to find any type of regulatory requirements for this, so any input would be greatly appreciated.

Purely an internal policy decision. If your credit underwriting criteria is sufficient to allow a little wiggle room, then going back to them for a few bucks probably is not worth the effort.

Thanks Randy I appreciate the help.