When you buy or refinance a home, there are many moving parts and tons of paperwork. The loan processor is the main person who keeps the process moving along. If you’re getting ready to apply for a mortgage, here’s what you need to know about working with a loan processor.
What Is a Loan Processor?
When you apply for a home loan, you will begin by working with a loan officer or mortgage broker. But once your application is submitted, the next stage is handed off to a loan processor (sometimes called a mortgage processor). The loan processor, like the loan officer, is employed by the company that’s originating the loan.
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The loan processor is essentially the liaison between the borrower and the underwriter, says Matt Weaver, vice president of mortgage sales at CrossCountry Mortgage in Boca Raton, Florida. “The processor is one of the most critical pieces in the entire loan process and home purchase,” he says.
That’s because, Weaver says, processors are so “high-touch” with customers. The loan processor is the homebuyer’s main point of contact when it’s time to submit documents. In other words, the borrower will likely have a lot of back and forth with the loan processor, since it’s the processor’s job to gather everything the underwriter needs.
What Does a Loan Processor Do?
A loan processor handles the facilitation and verification of all the paperwork and documents between the customer and the underwriter, says Wendy Stockwell, vice president of operations support and product development at Embrace Home Loans in Middletown, Rhode Island.
Here’s a breakdown of some of the loan processor’s key responsibilities:
Reviewing your application. The loan processor will look over all of the financial documents you submit during the initial application, including your pay stubs, bank statements, tax returns, and other income and asset documents. If anything is missing or needs clarification, the processor will contact you.
Verifying your information. In addition to gathering paperwork from you, the loan processor also has to verify your information, says Stockwell. “Specifically, verifications of employment and income, and if necessary, verifying assets available to complete the transaction,” she says.
Requesting supplemental documentation. Later in the process, if the underwriter requests additional information or has questions, those requests will go through the loan processor to you.
Gathering reports from third parties. The loan processor also runs your credit report, orders the home appraisal, and works with the title, escrow, and insurance companies.
In short, the loan processor is in charge of making sure all of the proverbial boxes get checked in a timely manner. If the processor is organized and efficient, it can help ensure a smooth process.
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Why Is a Loan Processor Important?
Considering that the December 2020 Origination Insight Report from ICE Mortgage Technology shows that it takes an average of 58 days to close a home loan, having a dependable loan processor can improve the overall customer service experience. “Technology can’t replace a loan processor. That human touch is critical to the process,” says Stockwell.
That’s why loan processors must develop good rapport with borrowers and set the right expectations, so they can help them get through the sometimes tedious and long process.
In addition, a loan processor who is familiar with lending requirements and standards will be able to spot anything problematic and reach out to you early on, even before the underwriter gets involved, which can help avoid delays. It could be as simple as spotting an error on your forms, or anticipating the underwriter will have questions about a gap in your employment history.
When Does a Loan Processor Get Involved?
Usually, borrowers will begin by working with a loan officer to figure out the best loan program for their needs. Once borrowers have submitted a loan application, the loan processor gets added into the mix. Some loan officers may engage the processor early on to get the necessary disclosures out to the applicants, says Stockwell, while others may handle that step themselves.
Either way, once the application is in and the underwriting process begins, the loan processor will usually be the main point of contact for borrowers until the underwriting is complete.
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Loan Processor vs. Underwriter: What’s the Difference?
An underwriter is the person who does the thorough review of the loan application on behalf of the lender to see if you meet the borrowing requirements. The underwriter is an expert on risk assessment who ultimately decides if the loan can go forward. As such, it’s important that underwriters do not have direct contact with the borrower, says Stockwell. “It protects the integrity of the underwriter so there’s not any undue influence and they are solely providing a credit decision based on the information provided to them,” she says.
To ensure this separation, the loan processor acts as the go-between with the borrower and underwriter.
How to Work Well With a Loan Processor
— To make your home loan process go smoothly, carefully submit neat and legible copies of your paperwork, and respond to follow-up questions as quickly as possible.
— Find the most efficient way to communicate and share documents with the processor, whether it’s by text, email, phone or fax.
— Don’t disrupt the loan-closing process by changing jobs, doing anything that will negatively impact your credit (like opening credit cards), or making large savings withdrawals.
— Avoid taking out your frustrations on the loan processor. Be friendly and courteous, even as you deal with lots of paperwork.
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