Processing – Mortgage lending cycle

This is second phase of the mortgage lending cycle. After the origination part which covers the soliciting customers for loan applications, the processor responsibilities are huge to discuss and vital as far customer document submission is concern for the approval of a loan. The processor needs to check all the documents like 1003, 1008, statement of assets and liabilities and some other documents which are required for the loan application. Processor checks those documents to make sure that the customer has submitted all the documents and are included in the application package. The documents need to be reviewed for the accuracy and send the information obtained for the verification.

In addition to that, the processor is also needs to check whether the customer has submitted the appraisal report on the property and completes the documentation process by obtaining all necessary documents and reports. Lenders generally use the URLA (Uniform Residential Loan Application) form of Fannie Mae or Freddie Mac. Basic information that URLA form has got are three types Borrower, Property, loan and transaction.

Borrower information includes Name of the Applicant, Social Security Number, Current Address, Employment history, Salary and Income information, Borrower’s assets and liabilities any public records of the borrower such as foreclosures and bankruptcies, current house rent and any mortgage payments.

Property information includes Address of the property, how old the property has, number of units need to be mentioned, legal description of the property and the property which is using is the primary or secondary needs to be clearly mentioned.

Loan and transaction information includes which type of loan and loan program is opting, loan amount and the interest rate, purpose of the loan, supposed housing expenses and some details of the transaction.

In addition to those, there are certain verifications which have to be conducted in this phase only are VOD, VOE, Verification of credit report and Appraisal Review Report.

Verification of Deposits: This phase basically speaks about the assets and liabilities that the borrower has and the processor has to send to financial institutions for the verification of assets, bank balances, stocks and bonds.

Verification of Employment: The information that has been given in the mortgage loan application needs to be verified from the employer. Through this phase the processor will come to a decision about the stability of the applicant to repay the mortgage loan.

Verification of credit Report: Processor needs to order a credit history report of the applicant to judge and come to a conclusion about how risky the applicant if he will be issued a loan. The credit report includes credit card no., installment loan, student loan, automobile loans, mortgage loan and how the applicant played those loans.

This whole information gives a clear picture to a lender to review the applicant’s readiness, willingness to repay the loan.

Appraisal Review Report: The appraisal review report is very important aspect of a loan application. The appraisal value is the actual value of the property. If the value of the property is less than the loan amount, the lender has to suffer a loss in case of foreclosure. So ascertaining the appraisal value is important to the lender because in case of foreclosure the lender has to sale the property and gets back the loan amount.