Loan Processing
After you take an application what happens. This section will answer this question. The loan paperwork goes to a loan processor and must perform the following items, so your loan can be approved:
- At the application or within 72 hours thereafter, you will receive all the required disclosures for the loan. These will include: a broker contract, a good faith estimate, a Truth-in-lending statement, ECOA notices, ARM notice (if an ARM loan), credit authorization, loan servicing acknowledgement, fair housing notice, among other documents.
- Then, either the loan officer or loan processor orders a credit report and uploads the data in to his/her Loan Origination Software (LOS).
- The loan with the credit reporting data is generally uploaded to an AUS (Automated Underwriting System). The loan officer or the loan processor generally does this function, but this varies by company and geographic area.
- Once the loan receives an approval (this may take modification within the AUS to accomplish this), then the approval will have a list of required documents that the processor must investigate and obtain. The information you give the loan officer at the application is many of these items that will be required. This information must be corrected for errors, so if the loan officer did the AUS approval function at the time of application, and you gave him bad information (whether intentional or not), your approval would be wrong and could later be denied.
- For full documentation loans, the processor generally verifies income, bank and stock deposits, credit history, rental or mortgage history, (sometimes an appraisal is ordered at this time and sometimes it is ordered after all the other information is proven), a title commitment, sales contract or Earnest Money Contract, (for refinances a loan payoff), and other items depending upon the loan and documentation type.
- Once all of this information comes back to the processor he/she takes the information and corrects the 1003 loan application with the corrected figures from the documentation provided. The processor will then get the loan reapproved with the correct information on the AUS system. If more documentation is now required, he/she will get this documentation, and do it again. If it is approved, then the processor will order an appraisal (if they have not already done so.
- Once everything is approved, the processor will place the loan with the Underwriter analysis, starting and final applications disclosures, income proof, deposit proof, misc doc, like divorce decree, appraisal and title commitment in the order the lender’s underwriter wants it (generally about 100 pages thick) and send this information to the underwriter for final approval.
- Oftentimes the underwriter will want something clarified and documented. This is call approval stipulations or (stips for short). Once these satisfy the underwriter’s approval guidelines, then an “approved to close” is given.
- Before the loan can go to closing final closing stipulations (closing stips) will be need and obtained by the loan processor. These include your hazard insurance, an insured closing letter from the closing agent, Title Company or closing attorney, a survey if required. The loan officer must also complete a closing fee sheet on the fees that must be collected on the loan and by whom. A survey may also be required and be obtained. Then the loan processor or most probable a closer will get all of the closing documentation required to close the loan.
- Then the closing documents and money is sent to the closing agent for closing and the buyers and sellers (or the borrowers only on a refinance) come to close the loan. The buyers give the closing agent a cashier’s check or have wired the funds to closing previously. Then all of the closing paperwork is signed.
This is where Mortgage Consumer Advocates (MCA) finds the some of the biggest problems. Often times the lender’s loan officer changes the fees or terms that allow the company to make more money. This is not a problem in itself, but most consumers do not know if the fees changed are legitimate and are not the result of wrong doing or if the consumer has been taken at closing.
MCA offers to look at your original Good Faint Estimate, Broker Contract, and Truth-in-Lending statement and evaluate it against your HUD I closing statement and interest rate trend, which we follow. This service is offered for only $99 and can potentially save you thousands in fees and even tens of thousands in interest rate payments throughout the term of your loans.
