Introducing the Fifth C of Underwriting 

Most of us know all too well the four Cs of underwriting: capacity, character, collateral, and credit. The four Cs have in many ways defined risk-based pricing on mortgages for decades, and are a convenient way to segment the myriad failures that led our economy to the precipice, as well. I can’t help but wonder, however, if it’s finally become time in this country to add a fifth C to the mix. Call it “calculation”—as in a borrower’s ability to understand basic math. Picture the following scenario: