Mortgage processing involves checking and collecting necessary data, verifying information, and preparing files for closing. It can take weeks to months and is done for all mortgage loan applications. Large banks handle it in-house, while smaller ones outsource to save costs. Some sellers hire processors who are paid a percentage of each closed loan.
Mortgage processing is the act of ensuring that all paperwork is in order for a mortgage loan application to be closed. It involves checking to see if necessary data is available, collecting any missing data, ensuring the application meets all loan requirements, verifying the information provided, and preparing the file for closing. A mortgage loan processor works closely with the seller who takes the loan application, as well as potential borrowers. Mortgage processing can take anywhere from a few weeks to a few months, depending on the type of loan involved. Mortgage processing takes place on all mortgage loan applications, including purchases and refinances, both residential and commercial.
Once the seller takes a mortgage application, it is sent to a loan processor. Once the loan processor has the application, the mortgage processing begins. Required disclosures are sent to be signed by the borrower, pay stubs are collected, bank statements and credit reports are reviewed to ensure the borrower has the ability to repay the loan. Many documents are only valid for a specific period of time, so the mortgage loan processor may request updated versions of the documents already provided.
Once all documentation is available, the mortgage processor will prepare the file for closing. The processor will contact the title company and request a preliminary settlement statement. This information allows the mortgage processor to do a cash-to-closing calculation and give the borrower an estimate of how much the borrower will pay or receive when the loan documents are signed. In some cases, the loan processor will also set a time and place for the signing to take place.
Large banking institutions generally handle mortgage processing in-house. Small banks and credit unions will often go for contract mortgage processing, which means they outsource this step of the loan process to a subcontractor. They pay a flat fee based on loan amount and loan type instead of keeping multiple mortgage loan processors on a full-time basis. The advantage of this is that the smaller bank or credit union is only paying for the work that needs to be done; there are considerable savings from not paying full-time salaries, benefits and overhead for staff processors.
In some cases, the seller who took the loan application may hire processors to work on their loans. Instead of writing a regular paycheck, these mortgage loan processors are typically paid a percentage of each loan that is closed. In this case, the mortgage loan processor is considered a subcontractor working with the seller rather than a full-time employee. The mortgage processor may work exclusively with one seller or may work for a small group of sellers.
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