This guide will cover mortgage processing and underwriting, leading to the clear to close. Mortgage companies have different ways of the ways they process mortgage loans. Many loan officers have worked as licensed mortgage loan originators for several different mortgage companies. Most loan officers will agree they have worked for various lenders. Here is a statement from Alex Carlucci of Gustan Cho Associates about his experience as a loan officer over a 30-year career span:
Every company I have worked with had different roles where the mortgage processor plays. Some mortgage companies will have the mortgage loan originator accumulate all of the paperwork from the borrower. All loan officers review borrowers’ documents and then provide them to the mortgage processor. The mortgage processor will then make sure that the documents provided by the loan originator are complete. After thoroughly reviewing it, the processor will submit it to the mortgage underwriting department.
A mortgage loan underwriter gets assigned to a file of a mortgage loan applicant. The mortgage underwriter will then go over every document. The underwriter will condition a list of missing items on a conditional mortgage loan approval. Here is when the competency of the mortgage processor comes into play. I have seen conditional mortgage loan approvals with over 60 plus conditions. In this article, we will discuss and cover Mortgage Processing And Underwriting Leading To CTC.
Here are some examples of conditions that the mortgage underwriter will ask for:
- Copy of driver’s license, copy of social security cards
- Many times mortgage processors will submit driver’s licenses or social security cards that are not legible, and the underwriter will condition for that.
- Missing pages from bank statements
- Many times a mortgage processor will condition new and updated bank statements.
- This is because pages are missing from bank statements or are not eligible.
Mortgage Documents Required To Process Loan
- Missing pages on bankruptcy paperwork if applicable, missing pages from divorce decree if applicable, tax returns not signed by the borrower or borrowers, or just missing complete documents
- Incomplete title and insurance information
- Updated bank statements and paycheck stubs
- Issues with the home appraisal report
Letters of explanation concerning credit inquiries, late payments, and prior bad credit.
Why Some Lenders Close on Time While Others Don’t
Mortgage Processing at some companies differs from any other mortgage company I have worked for. A typical mortgage company has the following processing system. Fiona McCue, a senior mortgage processor at Gustan Cho Associates said the following about mortgage processing:
The mortgage loan originator will collect most of the documents and turn them in to the mortgage processor. The mortgage processor will check off the item and the required documents. Once the mortgage processor seems it is complete submits it to the underwriter.
The underwriter will issue conditional mortgage loan approval with conditions. The file gets back to the mortgage processor. The mortgage processor will give the condition sheet to the loan officer. The loan officer gets conditions from the borrower, turns them into the processor, and then turns them in to the mortgage underwriter. The underwriter reviews the file and issues another set of conditions.
Mortgage Processing Leading To Clear To Close
When a mortgage underwriter issues a conditional mortgage loan commitment, the conditions must be cleared. Once the list of conditions is cleared, there should be a clear to close. Unfortunately, many mortgage companies have underwriters that issue complete new sets of mortgage conditions after the initial conditions are satisfied. This is not the right protocol. This is what delays mortgage closings and drives everyone crazy.
Delays In The Mortgage Process
The ideal mortgage company is under the watch of experienced mortgage industry professionals such as the following:
- Mortgage Underwriters
- Underwriting Director
- Underwriting Managers
- QC Underwriting Review
- Chief Compliance Director
- Mortgage Processing Team
How To Avoid Stress During Mortgage Process
There are systems where the mission is to avoid last-minute hiccups where it turns into delays. The management staff of a great mortgage bank realizes the importance of meeting the home buyer’s closing date.
Customer service-oriented lenders realize that they can affect people’s lives, home buyers or home sellers’ lives, and their families. Reputable mortgage companies are always implementing changes to make mortgage processing the best and be the industry standard.
One of the missions of great mortgage banking firms is to avoid last-minute denials often common at other mortgage companies. This is accomplished through a rigorous pre-underwriting process by Mortgage Experienced Mortgage Processors. They will check, double-check, and triple-check for potential mortgage conditions before submission to the underwriting department.
Pre-Underwriting Mortgage Processing
Many mortgage companies have launched an intensive pre-underwriting program. This is when the mortgage processing team, under the watch of experienced processing managers, thoroughly scrubs each mortgage loan application. Angie Torres, the National Operations Director of Gustan Cho Associates, address the importance of mortgage processing in the following statement:
Mortgage processing is the most important stage in the entire mortgage process. The mortgage processing team needs to catch any potential flaws in the mortgage processing file prior to submission. If great mortgage processor should not submit any file to underwriting unless they have thoroughly reviewed and analyzed the file for any missing documents, high cost violation potential, credit disputes, or not running the third-party national public records search first.
The team of the mortgage processing department of a successful lender will aim to have as few mortgage conditions as possible once the mortgage underwriter issues a conditional mortgage loan approval. The main goal is to get the mortgage application as neat, organized, and complete as possible. This is so the mortgage underwriter does not list dozens of conditions, kick it back, or put the file in suspense.
Dangers With Submitting Incomplete Documents
Sloppy files are all reasons for mortgage approval delays. Incomplete documents are the reasons for last-minute mortgage loan denials. Many mortgage companies have implemented new rules. This is due to new mortgage regulations to get title and homeowners insurance information during the mortgage processing stage instead during the mortgage approval process. Here is what Angie Torres of Gustan Cho Associates said about the importance of mortgage processing:
Once a mortgage underwriter issues a conditional mortgage loan approval, the goal is to have as few conditions as possible. The goal is to clear up those conditions within 48 hours and have the mortgage file re-submitted for a clear to close.
Many aggressive mortgage companies are gearing up to be the best mortgage company in America. Young, aggressive, expanding mortgage companies spare no expense in hiring the most talented mortgage professionals in the industry. When a file is submitted to underwriting and assigned to an underwriter at a reputable mortgage company, you can rest assured is coming back with a mortgage loan approval with little to no conditions due to the aggressive, intense pre-underwriting process.
Testimonials and Reviews on Their Experience of Mortgage Processing
Like many shares of large national mortgage companies, larger national mortgage companies have their fair share of bad reviews and testimonials. However, borrowers have to understand and keep in mind that the reason large mortgage banking companies have bad reviews or testimonials. It is not because of the mortgage company but due to the individual mortgage loan officer. Here is a review from Katrina Campbell, a borrower of Gustan Cho Associates, who got denied loans from multiple lenders and was referred to Gustan Cho Associates. Katrina Campbell of Coral Gables, Florida, wrote her experience in her mortgage processing and underwriting experience to our customer relations department at Gustan Cho Associates:
To the team at Gustan Cho Associates and future clients of Gustan Cho Associates. I just wanted to say how happy I am that we have Angie Torres and Gianna Dilla of Gustan Cho Associates as mortgage processors. I have been to four different mortgage companies and was promised that we could get approved, and were all issued pre-approvals. However, the four lenders all found one or two reasons why we could not close and denied us a mortgage loan. We were referred to Mr. Cho at Gustan Cho Associates, but for some reason, Mr. Cho was different than any other loan officer we spoke with. My husband and I decided to give buying a home one last chance. During the mortgage process at Gustan Cho Associates, we ran into a couple of hiccups. But the whole team at Gustan Cho Associates has gone beyond the call of duty to get my family and me in our new home before Christmas. Getting moved in to our new home before Christmas was important to me. Sure enough, we had a Christmas Miracle thanks to Team Gustan Cho Associates, Angie Torres, and the entire operations and support staff at GCA Mortgage Group. Angie Torres informed me of the entire mortgage process and provided great customer service! Words can’t express how grateful I am for her hard work and the long hours she’s put in to close this deal. | Katrina Campbell, Coral Gables, Florida USA
The mortgage company cannot control how its loan officers service their clients. Some loan officers may not promptly return phone calls, which is one of the most common complaints. When these borrowers get upset, they do not target the individual loan officer, but the mortgage company, the loan officer, is associated with. Fortunately, with bad reviews and testimonials comes good reviews.
This mortgage processing and underwriting blog was updated and published on March 19th, 2023.
March 19, 2023 - 7 min read