What Is a Mortgage Processor?
A loan processor helps collect and organize your application paperwork before your loan file gets approved by the underwriter. Once you’ve completed a loan application, the mortgage loan processor takes over and plays an important role in guiding your loan to the closing table.
What is a loan processor?
A loan processor (also called a mortgage processor) prepares your mortgage application file and other paperwork for delivery to the mortgage underwriter. The loan processor gathers documents to check all the information on your loan application, including pay stubs, W-2 forms, bank statements and credit report explanations.
The loan processor works with your loan officer to make sure your financial profile fits the lending guidelines for the loan program you’ve selected. Note that loan processors don’t have a license to provide you with any advice on the best loan program, interest rates or closing costs — only your loan officer can legally answer those types of questions.
More importantly, mortgage loan processors organize your paperwork in the format required for each loan product, so the underwriter can quickly locate the information to provide a loan approval decision.
What does a loan processor do?
Lenders typically hire loan processors to keep track of the multitude of documents that change hands during the loan process. Loan processors also prepare these documents using a mortgage loan processor checklist that varies by lender and loan product. The goal, however, is the same — keep everything in order, on time and moving toward a successful closing.
7 key responsibilities of a mortgage loan processor
A mortgage processor’s primary duty is to ensure the proper documentation is included in a loan file and that the borrower meets the requirements for the loan program they want. Most loan processors will perform some or all of the following seven functions:
1. Review your financial documents. Although a loan officer typically does this when they intake your application, the loan processor double-checks the finer details. This may include ensuring that income documents are legible, earnings calculations are correct and all the pages of your bank statements are present.
2. Request items from your credit report. If there are outdated addresses or late payments and collections on your credit reports, the loan processor collects letters of explanation from you for clarification. If your credit report shows public records like unpaid child support or past bankruptcies, the processor also requests court documents if they aren’t easily available through public record databases.
3. Request written verification of application information. Sometimes, an underwriter needs written verification of employment or your bank accounts. The loan processor may submit a form for your employer or bank to fill out. Or, in the case of an online mortgage, you can provide the lender with permission to request the information electronically. Loans backed by the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) or U.S. Department of Agriculture (USDA) can require special documents a loan processor may request.
4. Order title work and appraisals. The mortgage loan processor works with a title or escrow company to collect information about the property you’re buying — and ensure it’s free of any ownership claims. If a home appraisal is needed, the loan processor collects a fee from you to pay for it and schedules it with an appraisal company in a timely manner.
5. Work with the underwriter to clear conditions. After you receive a conditional loan approval, the loan processor collects any outstanding documents needed to resolve them. They also handle any last-minute changes to finalize your loan package — such as fixing a typo in the home appraisal report or requesting information from your homeowners insurance company — to get your loan ready for closing.
6. Keep everything running on schedule. A good loan processor pays close attention to contract deadlines spelled out in your home purchase agreement. Your mortgage processor also keeps track of your mortgage rate lock expiration date, so you can close on time and avoid costly lock extension fees.
7. Help prepare your loan file for closing. Once the underwriter has cleared all loan conditions and gives you the green light to close, the loan processor may partner with an escrow or closing agent to get your paperwork ready for closing. The processor usually communicates with the title or escrow company to schedule the signing, and to verify how much cash you need at the closing table to make your down payment and pay closing costs.
Loan processor vs. underwriter
While a mortgage processor makes sure your application, documents and supplemental information are accounted for and in order, a mortgage loan underwriter determines whether you meet the guidelines for the home loan you’ve requested. The underwriter ultimately approves, suspends or denies your loan after analyzing whether you can repay the loan using the assets, credit, employment and income documents the loan processor submits on your behalf.
A mortgage underwriter also ensures the home is in good condition and meets basic safety standards. Additionally, the underwriter checks that the appraised home value makes sense and that the property’s title transfers without any issues. A loan processor or loan officer typically communicates any underwriting issues that crop up, but the underwriter rarely talks to borrowers during the loan process.
Loan officer vs. loan processor
Unlike unlicensed loan processors, loan officers must be licensed to originate mortgages in the states they do business in. Their primary job is to act as a guide in the lending process, reviewing your application, making loan program recommendations and searching for your best rates and terms based on your financial profile.
A loan officer may also be the go-between for anything requested by a loan processor, depending on whether you work with a mortgage broker, mortgage banker or an institutional bank.
Mortgage brokers and mortgage bankers often have in-house loan processors, so you’ll have a regular loan processor assigned to your file during the process. Large banks may have centralized loan processing, which means your loan application is submitted to a location reviewing applications from several different areas. In this case, your loan officer typically gathers any items the mortgage loan processor requests.
To keep the mortgage application process moving along, provide any additional documents or explanations to your loan team as soon as possible.