Order an inspection or appraisal. The mortgage company may require an inspection or appraisal of the property being purchased before the loan can be approved.
Depending on your employer's rules, it may be your responsibility as a loan processor to order these. The underwriter will review the inspection and appraisal to determine the value of the collateral for the loan. Some states may have additional requirements, such as certification that there are no termites on the property. Start a title search.
The title search for the property will reveal whether there are any outstanding liens or other claims against the title, which could affect the value of the property. Part 2. Check the borrower's income sources. The borrower's income is perhaps the most important part of their loan package, because it determines their ability to pay back the loan. Typically you'll be looking at the borrower's tax returns or pay stubs going back a couple of years.
For example, if you have a borrower in their mids who just graduated with a professional degree and has started working full-time in that field, their income probably will increase as they gain experience in their field. You may need additional information to verify the borrower's income if they are self-employed. Request this information as soon as possible to avoid any unnecessary delays. Evaluate the borrower's assets. The borrower may have other property that either could generate income on its own or could be liquidated to pay debts if necessary.
The value of these assets will affect the amount of the loan that gets approved. When assessing value here, take into account whether the borrower has used that property as collateral on another loan. Analyze the borrower's outstanding debts and credit history. The borrower's credit report provides a snapshot of how that borrower handles credit.
Compare their outstanding debt to their income, and check for missed payments. If the borrower doesn't meet these standards, they may need to provide additional information. For example, if a borrower has an unacceptable number of late payments on their report, the lender may require an explanation.
Get proof of insurance. All lenders require borrowers to prove that they have homeowner's insurance, or can get homeowner's insurance for the property. Your employer will have set coverage standards that must be met. While the homeowner is still paying their mortgage, the insurance protects the lender as well as the homeowner from loss.
If proof of insurance wasn't submitted with the original loan application, work with the loan officer to get documentation from the borrower. Part 3. Review the file. Before you send the file off to the underwriter, take a moment to look through all the information and documents in the file and make sure everything is complete and accurate. Check for errors and contact the loan officer if you need clarification on anything.
This saves the underwriter some time as they go through the file. Make sure the file follows the underwriter's formatting and organization guidelines. If documents or information are presented in the wrong order, it could impact the loan's approval. Request any additional reports of documents. The underwriter requires specific documents and information in each loan file.
If you found missing documents in your review, contact the loan officer as soon as possible. For example, suppose the borrower missed three payments on a car and had it repossessed. The borrower may be able to provide information that would help excuse them for that fault.
Forward the loan package to the underwriter. Once you're satisfied that everything in the loan package is complete and in an acceptable form, it's ready to move on to the underwriting process. This is especially likely if you're just starting out as a loan processor. Work with the underwriter to resolve any problems. The underwriter may issue a "suspense" on the loan if they require more information for processing. They may go directly to the loan officer for this information, but frequently as a loan processor you will act as an intermediary between the underwriter and the loan officer.
Ryan Baril. After underwriting is completed, and assuming the underwriting decision was an approval, the file will go to closing. Not Helpful 1 Helpful Approval of the loan comes from underwriting. In most cases, the underwriter will issue a conditional approval, then the processor will obtain and submit the conditions and will be issued either a new conditional approval or a final approval.
Not Helpful 1 Helpful 7. Include your email address to get a message when this question is answered. You Might Also Like How to. How to. More References 5. About This Article. Co-authored by:. Co-authors: Updated: May 6, Categories: Lending. Read through the application, comments, notes, and overall loan request.
You should make sure that you understand the loan in its entirety before moving forward. If you have any questions about the loan you need to clarify these issues with the Loan Officer before moving forward. After you have reviewed the information and have a clear picture of the loan and why the applicant is requesting it, you'll enter this information into your company's loan processing computer system. There are many programs out there that your employer will use; many of them are a combination of home-grown software packages.
However, the reason this information needs to be fully entered into the computer system is because fulfilling all the requirements of a successful loan is tedious and deadline specific. The loan processing software you use will keep you on track for the next steps that need to be completed as well as their related deadlines. Once this information has been fully entered into the computer system, you can now proceed to the next step.
Interested in learning more? Why not take an online Loan Processing course? Probably the most important step is to verify all the income, assets, and employment information of the borrower. You need to verify the employment of the borrower VOE. You need to verify the income of the borrower VOI. You also need to verify the assets listed by the borrower VOA and any other income information required or produced by the borrower.
Every lender differs in the way you go about verifying a loan applicant's income, so be sure to follow the procedures for your specific lender. If your lender requires verification of employment in writing, you'll need to request that letter from the loan applicant's employer. For some lenders, paystubs and W2 forms are sufficient. And yet for others, simple verbal verification of employment by phone is fine. You need to record each verification that you have made into the loan processing software which you are using.
Now that you have reviewed all the information in the loan file and are satisfied with the documentation you have provided and verified, you will now finalize the loan package and deliver it to the lender, underwriter, and manager.
In summary, your file should include the loan application , this is the typed and signed application with all information provided by the loan applicant, the credit report , all verifications of employment, income, assets W2s, paystubs, tax returns, and bank statements, for instance , any valuation reports inspections, appraisals, proof of insurance , any title reports particularly noting any liens , and any public legal disclosures that must be signed by the loan applicant.
The final product should be sent registered mail to the appropriate parties most likely the lender or the underwriter. Online Class : Procurement Management. Online Class : Team Building Online Class : Crisis Management Online Class : Introduction to Six Sigma. Online Class : Small Business Guide. Online Class : Lawful Employee Termination. Follow Us Online.
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