Role Of Mortgage Processor During The Mortgage Process

This BLOG On What Is The Role Of Mortgage Processor During The Mortgage Process Was UPDATED And PUBLISHED On October 25th, 2020

The mortgage processor plays one of the most important roles during the mortgage process.

  • It is because of the mortgage processor that a home mortgage has no stress and closes on time
  • The mortgage processor is the person who quarterbacks the borrower’s file to get it to the finish line
  • It is the role of the mortgage processor to make sure the paperwork and documents submitted by the loan officer is complete
  • The mortgage processor realizes that underwriters will kick back a file if the file has documents that are not legible and/or has missing pages
  • One of the main reasons for delays in the mortgage process and delays in closings is due to underwriters kicking back the file back to processing due to incomplete documents
  • A good experienced seasoned mortgage processor will not submit a file to underwriting without a complete clean package with no missing documents
  • An experienced veteran mortgage processor will make sure all pages are legible and fully complete and will label each document to make the underwriter’s job as easy and smooth as possible
  • Mortgage underwriters know and recognized great processors and normally underwrite their files first

The mortgage processor will take the file from the time the file is submitted, oversea the underwriting process, gather conditions after the conditional loan approval, submit the file for a clear to close, oversea the closing docs, coordinate the closing with the title company, make sure the mortgage docs gets sent to the tile company, make sure the wire gets sent out, and oversea the home closing to make sure everything runs smoothly.

Documents Required For Mortgage Processors To Start The Mortgage Approval Process

Prior to issuing a pre-approval, mortgage loan originator will request documents such as the following:

Role Of Mortgage Processor

  • two years tax returns
  • two year’s W-2s
  • recent pay check stubs
  • 60 days bank statements
  • letters of explanations
  • other basic documents in order for him to qualify and pre-approve home buyers for mortgage

Other paperwork and/or documents that may be required depends on the borrower’s credit profile.

  • Borrowers who had prior bankruptcies, foreclosure, deed in lieu of foreclosure, short sale, divorce, or other extenuating circumstances need to provide proper documentations
  • Letters of explanations (LOX) will be asked frequently
  • However, at Gustan Cho Associates, the loan officer will assist borrowers when writing letters of explanations
  • Letter of explanations only need to be one or two sentences and nothing too long

The loan officer should not be submitting a borrower’s file to processing until they have collected all of the documents and have thoroughly reviewed the loan application, documents, credit report, and other paperwork.

Preparing Borrower’s File And Getting It Ready For Processing And Underwriting

The mortgage processor will thorough review the documents that has been submitted.

  • The processor will check the documents has no missing pages and are complete and are legible
  • If there are missing pages and/or are not legible, the processor will notify the borrower
  • The processor will create a file that is organized, labeled, and easy for the mortgage underwriter to analyze and process so the outcome will be a conditional loan approval with as little conditions as possible
  • Experienced seasoned processors will also double check the borrower’s credit report and make sure there are no credit disputes on non-medical collections and/or other derogatory credit tradelines
  • Experienced processors will kick back the file to the loan officer if they see the loan officer if the application is not complete and/or if there are missing documents

In this article, we will cover and discuss the Role Of Mortgage Processor During Mortgage Process.

Automated Underwriting System

Once the loan officer reviews the mortgage loan application and credit report, the loan officer will run the file through Automated Underwriting System for an automated approval.

  • The automated underwriting system (AUS) is a sophisticated highly technologically advanced computer system
  • Loan officers will enter the borrowers completed 1003 mortgage loan application and credit report
  • Within seconds the automated underwriting system will render an automated decision

Loan Officers should issue a pre-approval letter until they get an approve/eligible per automated underwriting system.

  • Every lender has their own system in issuing a pre-approval
  • All pre-approvals at Gustan Cho Associates Mortgage Group are fully qualified and have an approve/eligible per automated underwriting system (AUS)
  • Loan Officers need to be extra cautious when issuing pre-approval letter on VA and FHA manual underwriting files
  • Files that are very tricky should be underwriting first and then issued a pre-approval letter
  • TBD PROPERTY UNDERWRITING APPROVAL are files that has been underwritten first and issued pre-approvals by a mortgage underwriter

There is no reason why a pre-approved borrower should stress during the mortgage process and the file should not close if the loan officer has properly qualified the borrower prior to issuing the pre-approval.

What Is Role Of Mortgage Processor During Home Buying Stage

Loan Officers are allowed to issue pre-qualification after reviewing the following:

What is Role Of Mortgage Processor During Home Buying Stage

  • Mortgage Loan Application 
  • Credit Report
  • Credit Scores

The loan officer should interview borrowers and make sure there are no judgments, tax liens, or other public records they are aware of but is not on their credit report. All lenders will run a national third-party public records search.

Important Documents That Are Gathered And Reviewed By Mortgage Processors

Loan officers will request documents and paperwork that is necessary to start the mortgage approval process.

Borrowers financials such as the following:

  • two years tax returns
  • two years W-2s
  • most recent paycheck stubs
  • 60 days of bank statements
  • investment accounts
  • other asset accounts
  • divorce decree if applicable
  • bankruptcy paperwork if applicable
  • foreclosure paperwork if applicable
  • child support paperwork if applicable
  • other documents
  • Once these documents are gathered, it gets assigned to a mortgage processor
  • Role Of Mortgage Processor is to prep all documents in order and make sure there is no pages missing to submit to underwriting for a pre-approval
  • The role of mortgage processor and loan processing is the gathering and packaging of all paperwork submitted by borrowers in a timely manner

Role Of Mortgage Processor is to make sure everything is in order. The mortgage processor will get it prepped up to be submitted to the underwriting department for a conditional approval with as little conditions as possible.

What Is The Role Of Mortgage Processor After Conditional Loan Approval

The main role of mortgage processor is to make sure that all documents submitted by mortgage loan originator on behalf of borrowers is as complete as possible. The Role Of Mortgage Processor is to get the mortgage loan package submitted to a mortgage underwriter for a pre-approval.

  • The mortgage processor makes sure that all documents submitted is complete

For example, if the mortgage loan applicant submits 60 days of bank statements, the mortgage processor will review the following:

  • that there are no pages missing
  • review the bank statements to make sure there are no overdrafts
  • review there are sufficient funds for cash to close
  • Mortgage lenders can deny a mortgage application if borrowers had overdrafts in the past 60 days
  • A mortgage processor that submits bank statements without reviewing it for overdrafts will most likely get a denial by the mortgage underwriter
  • Role of mortgage processor is if they notice an overdraft or overdrafts in bank statements, they will notify the mortgage loan originator

The mortgage loan originator will deal with the overdraft issue with borrowers.

Gathering Mortgage Documents

The role of mortgage processor includes gathering all documentation and taking each mortgage application from the pre-qualification through the closing stage.

What is Gathering Mortgage Documents

  • The mortgage processor will itemize the conditions once borrowers get a conditional approval
  • Input the conditions into the system until clearance and clear to close

The role of mortgage processor is also to verify all documents submitted such as the following:

  • credit reports
  • appraisals
  • title
  • insurance
  • other tasks related to getting the mortgage file to the closing table

The Closing Disclosure

The role of mortgage processor is also to prepare the Closing Disclosure (CD):

  • Get the final CD approved by the end mortgage lender and/or investor
  • Coordinate the preparation of the mortgage loan documents
  • Make sure it gets to the title company in a timely manner
  • The role of mortgage processor is to be the quarterback between the title company and end lender and/or investor and make sure that the mortgage loan closes

Role Of Mortgage Processor: Prepping Mortgage Application Prior To Submitting To Underwriting

The mortgage processor, also known as the mortgage loan processor, is an extremely important person who has one of the most important roles in the mortgage approval process.

  • A sloppy, incompetent, or inexperienced mortgage processor is the reason why mortgage loans do not close on time
  • If the loan application is not processed correctly the first time around and gets submitted to the mortgage underwriter, the underwriter will kick it back and the process starts all over again
  • A professional competent mortgage processor’s main goal is not to get any conditions back after submitting it to underwriting
  • Conditional approval is a mortgage approval with conditions that need to be provided in order for a clear to close
  • A good professional mortgage processor should get back no more than 5 conditions on conditional approval by the underwriter
  • I have seen 30 or more conditions come back sometimes with conditional approval from a mortgage underwriter
  • Some mortgage processors will not submit a mortgage application package to the underwriter until they have received every single line item that is required

Some mortgage processors will not submit a mortgage application package to underwriting even if there is a missing blank page on bank statements. If a mortgage processor is being super picky, she is doing a great job. I rather have a mortgage processor be super knit picky than a mortgage underwriter.

7 Comments
  1. David Buja

    Gustan,

    Thanks for talking to Kevin and I we are very excited to add this as part of our platform. I plan on adding 5 people to just do home mortgages. That being said I just have a few questions before we get thing rolling. What are our commission levels we will be paid on loans I know they very I just want to know if that can also increase on a production basis? Can you pay Capital Network Group directly for all loan officers? Can we add other lenders to use with you as our sponsor including credit unions? Thank you I look forward to moving ahead!

    1. Gustan Cho, NMLS 873293 says

      David, sorry for the delayed response. I just connected with Kevin and he gave me a thumbs up that you emailed me. I ignored this email because I saw insurance on it and thought it was SPAM/Marketing. In my opinion and advise to you and Kevin is for you not to hire anyone without experience until either you and/or Kevin have originated your own loans. It takes a lot of time and work to train newer loan officers. We can talk about this over the phone more in detail. The comp plan we have is 125 basis points for self generated deals and 75 basis points on company provided exclusive leads. I am going to have to hire you guys under Capital Lending Network, Inc (www.capitallendingnetwork.com) since Loan Cabin, Inc. will no longer hire any licensed loan officers without 2 years experience and $24 million in annual production as many other companies. We have over 47 wholesale lenders so we can do every type of loan program out in the market. Besides FHA, VA, USDA, Conventional we also offer non-QM loans such as mortgages one day out of bankruptcy, foreclosure, short sale and bank statement loans, fix and flip, asset-based lending, ITIN, and dozens of other mortgage programs. All licensed loan officers need to be paid by the company via W2. Eventually, if you and Kevin get experience and get consistent monthly production, I can help you set up your own branch office where you can be on your own P and L. You do not want to start with being on your own P and L. You will go bankrupt. Just credit reporting fees for a producing branch can exceed $20,000 per month. You would need to do about $5,000,000 per month in production for you and Kevin to be profitable on your own P and L. We can add wholesale lenders to our network if you plan on doing consistent business with them including credit unions. We actually have Advancial Mortgage out of Dallas which is a huge credit union for our condotel, non-warrantable condo loans and foreign national mortgage programs. Don’t hesitate to ask any questions. Whether you guys join my team or start working somewhere else, I am here to help and will advise you with no strings attached. Have a great evening and talk to you soon.

      1. David Buja says

        The reason we need to be paid 1099 is so that we can make money as a company for expenses. If we pay all the money direct to the officer the company makes nothing? What is a good solution for this? Or can you W2 the company half and the Loan officer half?

        1. Gustan Cho, NMLS 873293 says

          Eventually when you guys become a net branch and have your own P and L, the branch will be on a P and L. All expenses need to be paid by corporate. After all expenses, the net profit will go to your P and L which is your profit. Let’s take a case scenario: Let’s say your comp plan for your branch is 200 basis points. You pay your loan officer 125 basis points. Lets just assume expenses will be 25 basis points. There is a 50 basis point profit. So the 50 basis points will go to your P and L. Profit of 50 basis points. This is a very simplistic example. The mortgage industry is very regulated. 1099 is not allowed. All expenses from running a branch needs to be paid by corporate and not by the branch. All loan officers need to be paid by corporate and not the branch. Loan officers can only be on two comp plan. This is whether it is our company or any other mortgage company. The branch will get an override through your profit and loss.

  2. Mo Brooks

    Hello, my name is Marquis Davis and my family and I are currently residing in our dream home. We rent this property for $1500 a month. The landlord called me yesterday saying that they would like to sell the property but are seeing if we want to buy it first. They are willing to pay any of the inspection costs and such. The problem I am running into is that I have terrible credit, 514, my wife’s credit is 630. I am a veteran who served 9 years in the Army and all of the VA loan places I have contacted told me I needed a 620 credit score. I am lost, we have no savings due to this covid pandemic. My wife works full time making $13 an hour and I am 100% disabled receiving 100% VA disability pay. I do not know if you can help me but I am desperate.

    Thanks

    Mo Brooks

  3. Jim Smith

    I’m 18 mo into chat 13 with on time payments. I have been approved by trustee to purchase. Im in a contract set to close Nov 30th and my lender just fell through due to a late payment before 18 months ago. I need help ASAP.

  4. Chip Washington

    Interested in Non-QM mortgage in NC. 1 year seasoning on chapter 7 (On Feb 12), income 106k, hoping for 10% down. Looking to purchase in March, close in April/May.

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