The term processing could apply to just about any multi-step undertaking, but when the subject is mortgage lending, processing of the loan application is as specialized a function as some of the most document-intensive businesses you can imagine. The individual entrusted with processing of a mortgagte loan application, namely a processor, must be uniquely qualified and therefore is compelled to obtain the education and training necessary to be as efficient and thorough as the position demands.
In a mortgage loan application, the end of an originator’s job marks the beginning of a processor’s job, at which juncture it is effectively the processing stage, which places the responsibility of loan preparation for underwriting on the processor. Just as the loan officer must be able to identify and address potential problems at the origination stage, a processor is expected to verify income and assets with acceptable documentation, as well as ascertain the borrower’s credit is satisfactory enough to merit submission to underwriting.
It is at this stage where many a loan is held up for reasons unforeseen by the borrower, originator or processor due to the simple fact that several different elements are added to the equation; especially in the case of a FHA mortgage.
Specific issues could be the appraisal report (which may or may not reflect a value sufficient enough to support the loan), verification of employment (VOE), verification of deposit (VOD), proof of down payment, all required disclosures (including RESPA disclosures, and State-specific predatory lending documents), and a number of other requirements which must be dealt with before the loan application package can be submitted to an underwriter for approval consideration.
If everything falls into place in a timely manner – appraised value is adequate, VOE is returned by employer, VOD is returned by depository, and all disclosures are in order – then a processor can prepare the loan for underwriting. However, that’s a very big “if” because invariably it is necessary to wait for a verification to be completed correctly and returned, or there could be an issue with the appraisal which delays the process.
It is reasonable to opine here that one of the first lesson a processor learns is to submit to underwriting a fully processed loan application package; otherwise the package may be returned to processing as incomplete; so when a borrower wonders why the “process” takes so long to complete, the answer can be found in possessing a clear understanding of the steps required at each stage of the mortgage application process, especially stage two.
Processors are often accused of delaying or preventing a loan closing, but such accusations are unfounded because in many cases, a loan processor has absolutely no control over the actions of other parties involved, especially third-party participants, borrower’s financial institutions and employers, among others.
Mortgage related sites of interest:
To find out if you qualify for 203k financing, visit a HUD-approved lender at http://www.unitednorthern.com.
Humorous or Ironic?
If the government can’t run business, why is it that big business always run to the government for a bailout when it runs into trouble?
FHA-insured mortgages… Government-run for over 75 years. Lest we forget?