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Mortgage processing is the act of ensuring that all paperwork is in order for a mortgage loan application to close. It involves checking to see that necessary data are available, collecting any missing data, ensuring the application meets all loan requirements, verifying information provided and otherwise preparing the file to close. A mortgage loan processor works closely with the salesperson who takes the loan application, as well as with the would-be 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 salesperson takes a mortgage application, it’s sent to a loan processor. Once the loan processor has the application, mortgage processing begins. Required disclosures are sent out to be signed by the borrower, pay stubs are collected, bank statements and credit reports are reviewed to make sure the borrower has the ability to repay the loan. Many documents are only good for a specified period of time, so the mortgage loan processor may ask for updated versions of documents already provided.
Once all the documentation is in hand, 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-close calculation and give the borrower a ball park figure of how much the borrower will either be paying or receiving when the loan documents are signed. In some cases, the loan processor will also set up the time and location for the signing to take place.
Large banking institutions typically handle mortgage processing in-house. Small banks and credit unions will often opt for contract mortgage processing, meaning they hire out this step of the loan process to a sub-contractor. They pay a set fee based on the loan amount and loan type rather than keeping several mortgage loan processors on staff full time. The advantage of this is the smaller bank or credit union is only paying for the work as it needs to be done; there are substantial savings to be had by not paying full–time salaries, benefits, and overhead for staff processors.
In some cases, the salesperson who took the loan application may hire processors to work on his loans. Instead of making a regular paycheck, these mortgage loan processors are typically paid a percentage of each loan that closes. In this case, the mortgage loan processor is considered a sub-contractor working with the salesperson rather than a full-time employee. The mortgage processor may work exclusively with one salesperson or he may work for a small pool of salespeople.