One of the biggest problems facing mortgage originators, especially those who work independently or for small mortgage companies, is the time they must spend processing loans. Some originators get handcuffed by the mortgage-processing function because their companies do not provide an in-house mortgage processor.
This lack of processing power forces originators to perform various tasks, such as securing pay stubs, tax returns and employment verifications; ordering insurance and title work; tracking appraisals and disclosure documents; responding to underwriter inquiries; and more. All of this time spent on loan-processing tasks inhibits originators from focusing on building their book of business.
One answer to this dilemma is working with a third-party processing company. Third-party processors, or TPPs, can provide customized and cost-effective loan-processing services for residential mortgage originators, providing secure, compliant, accurate loan processing — often at no cost to the originator. Electing to use a TPP as a solution allows originators to be more efficient because it allows them to do what they do best — originate loans.
How TPP works
Third-party processing changes the landscape for mortgage companies and originators who don’t have access to in-house processors. Some mortgage companies simply don’t have the ability to hire in-house processors because they lack the space, have irregular loan volume or can’t afford the cost of a full-time processor. TPPs solve this problem by providing experienced processors who are available during business hours at no additional cost to the individual originator or mortgage company.
The TPP fee is frequently paid directly by the borrower at closing, so there is no cost to the originator if disclosed properly. This TPP fee is disclosed as a third-party vendor cost on the Loan Estimate (LE), just like title work, insurance, appraisals, etc. In these instances, the TPP cost doesn’t impact the originator’s compensation at all. Thus, originators derive all the benefits of having access to full-time licensed processors at no cost to them.
A third-party processor can process all the loan applications that an originator writes. The originator completes the loan application, selects the lender and fees, obtains the qualifying credit report and applicable supporting documentation, and then delivers the loan file to the TPP. That originator is now free to go out and originate more loans.
The lender gives the pre-approval and the processor ensures all documents are completed and ready to close. If the underwriter requires additional conditions, the TPP can even help the originator secure the additional documents. The TPP also reviews the conditions for completion and helps track the additional documentation. In addition, a TPP can work with the borrower and the wholesale lender on behalf of the originator to prepare for the closing.
More TPP benefits
Professional third-party processing companies can assist originators and their companies in other ways as well. When originators write loans, they may have processing questions they need to track down. A TPP can assist with that. Having an on-call processor enables originators to run scenarios and facts by a processor quickly and easily, and get a good idea about how to proceed with the loan. The TPP can even help determine which warehouse lender would be the best one to use when submitting the loan.
Additionally, TPPs can assist mortgage companies and originators with technology solutions for the collection of required borrower information in an organized fashion. Systems exist that automatically organize borrower information in a format suitable for the processor, which can reduce the steps required to complete the processing and help expedite the loan to closing.
For the mortgage company, using a TPP can help control costs, which go well beyond the salaries of a processing staff. Overhead costs of full-time employees include taxes and benefits, as well as equipment, office space, software licenses, and more. Using a TPP allows a company to employ qualified, experienced processors to handle all of its originator’s loans with limited overhead.
In addition, in-house processors often have many duties, while third-party processors generally are exclusively focused on processing loans. This is because many in-house processors must multitask to handle other administrative duties thrust upon them within the office setting, such as reception and bookkeeping. Thus, many in-house processors are not dedicated solely to processing loans. A TPP has one job: processing a loan to close.
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A professional third-party processor can bring confidence, experience and knowledge to many loan originators and mortgage companies. A good TPP company understands the needs of originators and borrowers, increases operational efficiency, helps automate workflow, and maximizes speed to closing. Most importantly, this new breed of mortgage industry vendor can provide an important line of communication between all parties from the time of mortgage application to funding of the loan.