Understanding all the steps helps brokers properly complete loan applications

Marian DeBonis, owner and mortgage trainer, CyberSpace Financial

As published in Scotsman Guide's Residential Edition, December 2005.

Many mortgage professionals assume that loan processing is easy. However, this is a major misconception. Mortgage processors' proficiency is important to a loan's outcome.

Processing is not about the loan amount. The same amount of time and effort goes into a $50,000 loan as for a $500,000 loan. What is most important in the processing stage is data integrity.

With the transition from manual underwriting to automated underwriting, data integrity has become the cornerstone of loan efficiency. It is common to see a loan structured one way and later restructured another way.

For all brokers, understanding the ins and outs of processing is key to a successful deal.

The players

To understand how loan processing fits, it is important to know the players in the loan process: the borrower, broker/originator, processor, underwriter and closer.

• Borrowers provide documentation for the 1003 loan application.
• Brokers/originators help borrowers complete and execute the 1003, in addition to the good-faith estimate (GFE), Real Estate Settlement Procedures Act (RESPA) documents and state-mandated forms. The release authorization, which is part of the RESPA documents that borrowers sign, allows originators or brokers to pull borrowers' credit -- a vital part of placing borrowers in the correct loan program and determining the appropriate rate. Originators will then access automated underwriting, or it will be assigned as a task for the processor. This is contingent on company protocol.
• Processors prepare the loan package. They first examine the origination documents for completeness and accuracy. Then they request any additional documentation, commonly known as outstanding processing conditions, that was not provided at origination. Once processors have all the conditions, the file is prepared for underwriting.

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