The definition in Truth in lending includes people responsible for approving loans but in the commentary it excludes people responsible for loan underwriting. I have always viewed underwriting and approving to be pretty much the same am I missing something?

(i) Loan production function. The term “loan production function” means an employee, officer, director, department, division, or other unit of a creditor with responsibility for generating covered transactions, approving covered transactions, or both.

1. Loan production function. One condition of the safe harbors under paragraphs (d)(2) and (d)(4)(i), involving transactions in which the creditor had assets of more than $250 million for both of the past two calendar years, is that the person who prepares a valuation or performs valuation management functions must report to a person who is not part of the creditor's “loan production function.” A creditor's “loan production function” includes retail sales staff, loan officers, and any other employee of the creditor with responsibility for taking a loan application, offering or negotiating loan terms or whose compensation is based on loan processing volume. A person is not considered part of a creditor's loan production function solely because part of the person's compensation includes a general bonus not tied to specific transactions or a specific percentage of transactions closing, or a profit sharing plan that benefits all employees. A person solely responsible for credit administration or risk management is also not considered part of a creditor's loan production function. Credit administration and risk management includes, for example, loan underwriting, loan closing functions ( e.g., loan documentation), disbursing funds, collecting mortgage payments and otherwise servicing the loan ( e.g., escrow management and payment of taxes), monitoring loan performance, and foreclosure processing.

It really all depends on how a bank is structured. Some have underwriting broken out into a position that does not approve. In others underwriting does include the credit approval and is separate from customer facing business development/sales positions compensated for business development.