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   ARTICLE   |   From Scotsman Guide Residential Edition   |   March 2004

The Benefits of Utilizing a Mortgage Loan Processing Company

The processing of loans affects the broker side of the mortgage industry. Regardless of how your loans are currently being processed, chances are your success and sense of security rest on how well your processing works for you. Many people have heard of mortgage loan processing companies but have no idea how to utilize them as a resource. So what do they have to offer you?

The benefits of using mortgage contract processing companies are numerous. Experienced processors know as much as a seasoned Loan Officer and possibly more. When you use a company with trained and qualified processors, the immediate advantage is access to their accumulative knowledge. You gain the support of highly qualified individuals helping you to originate and fund more and create stability and security for your business.

Outsourcing your processing can allow you to originate a higher volume without hiring or creating additional overhead. Depending on your volume, using contract processing for all of your files could considerably reduce your overhead and tax liability. You should also consider their services for temporary increases in business due to lowered interest rates. Instead of turning business away, you have an opportunity to close those additional loans without hiring. 

It can be very useful to outsource during times of urgency, as well. Stress from deadlines, obstacles and problem solving involved in processing contributes to a high turnover rate. You could find yourself without a processor or a plan B. It is smart to research loan processing companies and keep their information on hand, just in case.

Offsite processing reduces the phone calls and faxes coming into your office, as the processors are handling the approvals, conditions, doc orders and closing preps. You require less in-house staff, use less of your own office resources and, in turn, reduce your responsibilities. One of the goals of any mortgage loan processing company is to provide a service that frees the Loan Officer or Broker from the details of processing and allows them to market and do sales.  

However, utilizing a mortgage loan processing company differs from having an assistant or processor in your office. Responsibilities that you give to someone employed by you may not be part of the service provided by a company.  You will, at the very least, be asked to send in a very complete and accurate 1003 application, a form completed (specific to each contract processing company) with the lender, program, contact, appraiser, escrow/title/abstract/attorney information and instructions for the file.

If you have trouble placing your loans with lenders and finding programs, outsourcing your processing will not solve your problems. In general, mortgage loan processing companies will not “shop” with lenders to find the appropriate programs for you files.

In addition, all sales issues are your responsibility. If you are looking for a way out of having to be the “harbinger of doom”, then hire an assistant who lives for that sort of thing. A lot of work and effort go into getting a file funded. For what is charged, it is quite the deal already without the processor completing the L.O.’s tasks as well.

Keep in mind that a processor is usually someone who would like to remain behind the scenes. If they wanted to work in sales and handle sales related issues, they would make more money as a Loan Officer.

Before contacting a company to inquire about outsourcing, do some research online. Read the various websites and get a feel for how each company differs. Then, take some time to think about what you need right now and what your goals are for the next six months. Having these in mind when you call a mortgage loan processing company will allow you to ask very specific questions, such as the following:          

  • Do they process the type of loan you are doing?
  • What are the qualifications of the staff?
  • What is the price? Is it a flat fee per file or can there be additional charges? Is there a discount for volume? Who pays for shipping and mailing?
  • What about cancellation fees if the file does not fund?
  • Will you be working with just one processor or a team?  Or will your file be assigned as it is received?
  • How will you receive status on your files? How often?
  • How many files can they currently accept?
  • What are their turn times once a file is received or conditioned?
  • Will your files be taken care of if the processor working them is sick or on vacation?

It is not necessary to send files locally or in a state close to you (unless you are in a Brick and Mortar state such as Arizona where processors must reside in the state). Everything is just one day away, and technology has shortened those distances even further.  Remember to ask for a sales packet so you can see the level of detail the company puts into its work.

Keep in mind that the company may have some questions for you as well to see if they can be of service or to answer your questions accurately. Be prepared to answer how many loans you originate and how many of those loans fund a month, explaining the fallout if it seems excessive.

When working with a mortgage loan processing company, there are a few basic tips to ensure a successful partnership:

  • Be available – return calls or emails promptly.
  • Respond to your borrowers’ concerns that the processor cannot address in a timely manner.
  • Be accountable and follow through with what you state you will do.
  • Use email to communicate with the processor for faster service. 
  • Send complete and accurate 1008/1003/GFE with your files.
  • Know the program on which you are having them submit.
  • Treat your processor as a team member – not a service provider.
  • Pay the processing company promptly if an escrow officer leaves it off of the HUD and you receive their money.  Show that you value their service.
  • Pay the cancellation fee promptly when invoiced if you have previously agreed to do so.  In most cases, it will not cover the costs they have incurred.
  • Above all, be courteous and respectful.

Mortgage loan processing companies are a very valuable resource whose potential benefits are just recently being discovered by Loan Officers and Brokers around the nation.


 


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