Loan processing is the main method of obtaining a new mortgage or modifying an existing one. It is usually carried out by loan originators, loan officers, brokers, processors, underwriters, appraisers and abstractors among other professionals. Because origination involves several borrowers, with varied backgrounds, it is often complicated and lengthy. It becomes manageable when a bank has enough employees or an outside team of experts that can work quickly.
Completing loan processing quickly guarantees that your company will make more money via closing more loans.The process is started by either the loan originator when they contact potential borrowers. It can also be instigated by a potential home buyer who finds your bank and decides to fill an application form. A loan processor can therefore contact the loan originator or borrower to begin the complicated procedure.
A processing team will request the borrower to supply personal data and details of the property they want to buy with a loan. Loan processing depends so much on correct documentation about the asset being mortgaged and home buyer. Personal information normally involves a list of assets, liabilities and earnings that a borrower possesses. These details must be entered in the Form 1003. Once the details are included in the form, the processor must ask the borrower to sign it.
After this, they will provide the home buyer with a Good Faith Estimate (GFE) document, closing fees statement and a list of the entire approximated terms of the proposed mortgage. The next stage of loan processing involves gathering documentation for further verification of the information provided on the application forms. The main documents that are required include W-2 forms, pay slips, bank statements, a roster of assets and previous tax returns and credit reports.
The loan processing cannot go on well without all documents that represent a borrower's income. Today people are multi-tasking and therefore have many income sources. Your lending organization must know where its borrowers get all their monies from. When all sources of income including bonuses, commissions, salary raises, pension, rental income or stock exchange earnings are gathered, the processor is able to determine the borrower's total worth.
The total income is compared with total liabilities. The latter may include short-term or long-term debts. The mortgage loan processing team has to ensure that a borrower has secured homeowner's insurance. It will also appoint appraisers who will be in charge of evaluating the true value of the home being funded with a loan. Your outsourced processor will also liaise with the borrower to find out when he or she wants to allow the appraisers to evaluate the property in question.
Above all they will follow-up the home appraisal process to give you accurate reports. As the lender, you want to confirm that the borrower's price for the home is in line with the current market prices via home appraisal procedure. Loan processing proceeds to underwriting when document gathering and property appraisal are completed. The underwriter is given the whole documentation to make the final decision. They can either accept or reject an applicant's file based on the documents they have received from processors.
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