By looking beyond their walls, brokers can increase efficiency and save money

Brian Fisicaro, operations manager, MTG Processor LLC

As published in Scotsman Guide's Residential Edition, October 2009.

As underwriting guidelines continue to tighten and home values slide further in many markets, mortgage brokers across the country struggle to find new business, reduce expenses and remain profitable.

At the same time, today's mortgage industry epitomizes the interconnectedness of modern business, which can operate efficiently over great distances and without traditional office buildings.

In light of today's challenges and advanced communication technology, one of the best ways for brokers to cut overhead expenses is to outsource loan processing.

Five years ago, processing duties primarily were handled in-house. Immediate access to loan information was the main deterrent to sending loans for off-site processing. Thanks to advances in technologies such as hosted document-management, outsourced processing has evolved to make sense organizationally and economically.

Moreover, because of their specialization, outsource-processing companies often deliver a level of quality equal to or better than in-house processors. In light of this, brokers should consider outsourcing their processing.

What to seek

When choosing a processing company with which to partner, brokers should consider several things. Before picking a partner, however, you must know a processor's duties.

Loan processing involves the organization and movement of loan data. Good loan processors can categorize loan information, plan and carry out daily duties, and communicate with ease and precision.

Processors are responsible for collecting loan information from parties that may include the broker, the borrower and third-party service-providers. Processors also move that information to the individual making the underwriting decision.

A loan processor typically enters the picture after a broker takes the application and qualifies the borrowers for the best loan program available. Typically, the broker also will collect initial signed loan disclosures, income documents, photo identification, purchase agreements and other required documents.

After these initial steps, a processor is responsible for managing and monitoring the loan's progress. This usually involves, but isn't limited to:

• Analyzing the loan file for deficiencies;
• Running automated underwriting, when applicable;
• Making the initial loan submission to an underwriter;
• Ordering third-party services, such as appraisal and title;
• Reviewing the appraisal's value, comparables and adjustments;
• Looking at the title to ensure all liens, judgments and taxes are rectifiable;
• Sending for verification of employment, verification of deposit and verification of mortgage or rent;
• Updating insurance information to reflect the lender's mortgagee clause; and
• Placing an order for payoff information on existing mortgages.

After loan approval, the processor:

• Collects and clears any additional conditions requested by the underwriter;
• Schedules a closing date; and
• Requests signed closing documents to include in the loan officer's file for compliance.

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