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What does a mortgage processor do and what does it mean when your loan is “transferred to processor”?
Once you and your loan officer have chosen a mortgage and started your application, a loan processor will likely take over. He or she may perform many functions, including:
- Entering your application information into the lender’s software system
- Ordering credit reports, appraisals, title work and other services
- Inform you of subscription requirements and help you meet them
Depending on the lender, a loan processor can be the invisible person who creates a loan file and keeps it on track behind the scenes, or your primary contact throughout the mortgage application process.
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What Does a Mortgage Processor Do?
You will likely meet with your processor shortly after pre-qualifying for your home loan. That is, once your loan officer or mortgage broker has helped you choose a mortgage product, determine an interest rate, and perhaps pull your credit report.
Your next step is to fill out a home loan application. Some loan officers do this themselves, often using a laptop computer and automated underwriting software (AUS). This process may include checking your credit.
Alternatively, your loan officer can hire a mortgage processor to take your complete application and enter it into the lender’s system.
Related: How to Close Your Mortgage Faster
And your loan officer or processor will likely print out a mortgage application package and walk through it with you, explaining what the disclosures mean and making sure you understand and are comfortable with what you’re signing.
Next, your processor will need to order verifications from your employer, bank, and others to back up your documents and statements. Processors often open an escrow, order mortgage insurance policies and flood certificates, set up appraisals, obtain title insurance, and create a file organized according to very strict lender specifications.
Automated Underwriting Systems (AUS)
Most mortgage programs can be purchased electronically. They assess your debts, income and credit information and make one of four decisions:
- Approve, which means that as long as the documents you bring confirm what you are claiming on your loan application and the property meets the lender’s guidelines, you can probably close
- Refer, which means there are gray areas that need to be reviewed by a human underwriter
- Refer with caution, which is almost certainly an application denial unless the software receives incorrect information, as could be the case with impersonation
- Out of scope/ineligible, which simply means that you do not meet the program guidelines. For example, your loan amount may be higher than the maximum allowed by the program
The software also generates a list of documents that the lender must provide to back up the information provided on the application. It is the processor’s job to get this documentation from you. He or she may need to adjust the request if the information does not exactly match the documents.
Suppose you report that you earn $4,657 per month. But processor calculations from your payslips show $4,557 per month. So your processor should update the application and resubmit it, just to make sure the change didn’t impact your approval or the lender’s requirements.
Dealing with subscribers
Your processor will probably take on many tasks that you will never know about. An underwriter may ask for proof that your business is legitimate, for example. The processor can simply obtain copies of your county business license without asking you to bring them yourself.
Related: What Does “Subscription” Mean? (regarding loan conditions)
Note that no lender allows consumers to contact underwriters directly. They could never do their job, and they also have to be impartial. Your processor or loan officer will always be your intermediary.
If you have questions about the status of your mortgage application, your processor may have more details than your loan officer. He or she can be your main point of contact. It doesn’t put you off with an “inferior” employee. This means you connect with the person who has the information you need.
Working with Your Mortgage Processor
The main function of the processor is to make things as easy as possible for the underwriter, thereby increasing your chances of getting a good result.
It means that he or she is working on your on behalf of. Do not disrespect this valuable employee by ignoring requests for documents, explanations or other items. Return the phone calls and spare these people any tirade about why you shouldn’t have to show your divorce decree/proof of residency/voided checks/whatever.
Processors do not make lending decisions. But they can affect those decisions, and difficult customers yelling at them or calling them a dozen times a day can cause them to miss an important detail. Or maybe prevent them from working too late to move your case forward faster. Few processors work on commission, so extra effort on your behalf usually doesn’t translate to extra payment for them.
Be cooperative, grateful and kind. It could help you with your loan approval, and a little good karma never hurt anyone.
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The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent company or affiliates.
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