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If you’re in the process of getting a mortgage, it is common for you to come across specific individuals that enable your mortgage process from start to finish.
And a mortgage loan processor or loan processor is one of these individuals. A mortgage loan processor is the link between the borrower, mortgage lender, and underwriter in a typical mortgage process.
So, if you’re planning to buy a home or apply for a mortgage, you must understand the role of a mortgage loan processor, and how they can help you achieve your homebuying journey.
What is a Mortgage Processor?
A mortgage loan processor is any individual or software charged with helping potential mortgage borrowers set up the relevant loan documents and application files for onward delivery to the mortgage underwriter.
Typically, your dedicated loan processor will help you gather your financial documents, including pay stubs, W-2 forms, bank statements, and credit reports.
In addition, a mortgage processor works with your loan officers to evaluate your financials to ensure that it meets the lending guidelines for the mortgage loan you are applying to.
Remember that while a loan processor is involved in the mortgage process, they do not have a license to provide borrowers with professional advice on the best programs, interest rates, or any other major mortgage questions. Only a certified loan officer can answer those types of queries.
More importantly, as we mentioned in this article’s introduction, a mortgage loan processor is more of a middleman between you, the lender, and the loan underwriter.
>> More: How to Apply for a Home Loan
What Does a Mortgage Processor Do?
According to a report by the National Association of Mortgage Processors, “The primary function of the Loan Processor is to ensure the timely and accurate packaging of all loans originated by loan officers.”
In a nutshell, a mortgage processor does mainly administrative duties within a mortgage company.
However, some responsibilities come to mind at the mention of the words mortgage processor. They include:
- Collect and review your financial documents: While it is the duty of loan officers to review your financial document when they receive your loan application, a mortgage processor double checks the fine print. This may include ensuring that the information on your bank statement, pay stubs, and income calculations are legit and up-to-date.
- Analyze your credit report: One of the many roles of a loan processor is to request information surrounding a borrowers’ credit report. Typically, loan processors look out for inaccuracies, late payments, and collections. If they happen to find any, it is the duty of a loan processor to request letters of explanation from you about the discrepancies.
- Keep everything running on schedule: Yes, a loan processor can help you meet the critical timelines stated in your mortgage application. This ensures that you close on the house on time and avoid any unnecessary mortgage rate lock extension fees.
- Work with the loan underwriter: A loan processor works directly with the underwriter to finalize the loan application process. It is the duty of the loan process to transfer the correct compiled documents to the underwriter for final approval.
>> More: What Is Mortgage Underwriting?
What Happens During Mortgage Processing?
During your mortgage loan journey, your loan application will need to undergo what is known as mortgage processing.
During a typical mortgage loan processing, information about your financial situation is collected, reviewed, and verified by a loan processor before being sent to the loan underwriter for final approval of your mortgage application.
Here are some things to expect during your mortgage loan processing:
Document Verification
Before you head for your mortgage closing, you will need to provide another round of income and employment verifications.
At this point, expect your loan processor to request a verbal verification from your employer before approving your loan application.
Also, your bank’s verification of deposit form is assented to verify your account balance and bank statement.
Home Inspection
During your mortgage processing, your lender will request that you carry out a home inspection of the potential home.
A home inspection is an evaluation of a home’s physical condition. In the course of the inspection, a licensed inspector hired by the lender but paid for by you will evaluate the home roof, foundation, HVAC, flooring, and walls.
Home Appraisal
A home appraisal is one of the most important aspects of your mortgage processing journey. An appraisal which is usually conducted by a third-party appraiser, assesses your home’s current market value based on certain factors, such as lot size, location, building condition, features, square footage, and comp data.
An appraiser only considers the permanent aspect of the home and not the temporary parts like furniture and decorations.
One of the reasons a home appraisal is important is that it helps the lender determine whether the home is worth the requested loan amount.
More importantly, during a typical loan processing period, your lender will order your credit report, check your debt-to-income ratio, and reach out to your title and escrow company for proper verification.
>> More: How to Get Mortgage Preapproval
Mortgage Loan Processor vs. Mortgage Loan Underwriter
Although both a mortgage loan processor and an underwriter work hand-in-hand in a mortgage application process, they have different roles and responsibilities.
| Mortgage Loan Processor | Mortgage Loan Underwriter |
|---|---|
| Makes sure that your submitted documents are accounted for and in order | Determines whether or not you meet the lending requirements for the loan program you are applying for |
| Communicates with the borrower constantly during the mortgage processing journey | Has the authority to approve, deny, or suspend your loan application after analyzing your submitted documents |
| Serves as a liaison between the borrower and loan underwriter |
Mortgage Loan Officer vs. Mortgage Processor
It is common for individuals outside the mortgage industry to confuse the role of a mortgage loan officer with that of a mortgage processor. However, we must point out that they hold separate roles.
| Mortgage Loan Officer | Mortgage Processor |
|---|---|
| Usually licensed within their state of practice | Unlicensed but quite knowledgeable about the workings of mortgage loans |
| Charged with the responsibility of guiding a potential borrower through the loan application process. | Handles the paperwork by filing, double-checking, and communicating with the borrower for any additional information |
| Advise borrowers on the type of mortgage program they qualify for based on their financial situation. | More of a middleman between the borrower and loan underwriter |
Can a Mortgage Processor Deny a Loan?
No, a mortgage loan processor does not have the right to deny a mortgage loan application.
While a loan processor plays an integral part in a mortgage application process, the right to approve, deny or suspend a loan application lies only in the hands of a mortgage loan underwriter.
So, if your mortgage application fails to prove you deserving of a particular mortgage, the mortgage underwriter may be forced to deny your application.
How Do Mortgage Processors Make Money?
With the average loan processor taking home around $47,798 per year, according to a Glassdoor report, you may be wondering how they make this much money.
Generally, mortgage loan processors get paid for each mortgage application executed or through an agreed monthly salary. However, it is common for loan processors to earn commissions on each funded loan application.
Bottom Line: What Is a Mortgage Processor?
Like other actors in a mortgage lending process, loan processors play a considerable role in the success or failure of every mortgage loan application.
Understanding the role of a mortgage loan processor and how they can help you actualize your home buying dream can help you scale your loan underwriting process in a breeze.
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