Mortgage Loan Processing

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 business you can imagine. The position requires a processor to be uniquely qualified for the and therefore compels a would-be processor to obtain the training necessary to be efficient and thorough in execution of his/her duties.

In a mortgage loan application, the end of the origination stage marks the beginning of the processing stage, which effectively 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 that are 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 (Federal, including RESPA disclosures, and State-specific predatory documents), and a number of other areas which must be dealt with before the loan application package can be submitted to an underwriter for approval.

If everything falls into place in a timely manner - appraised value is adequate, VOE is returned by employer, VOD is returned by bank, 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.

I believe that one of the first lessons a processor learns is that the underwriter must be given a fully processed loan application package to work with; Otherwise the package may be returned to processing for completion; so when borrowers wonder why the "process" takes so long to complete, a clear understanding of the steps required at each stage may help to address that concern. Processors must not be blamed for any delays because in many cases, they have absolutely no control over the other parties involved.

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