What is the job of a processor and an underwriter?
What's with all the documents?!
MORTGAGE APPLICATION DOCUMENTS
Since the financial mortgage crisis of 2007-2008, underwriting has gotten tighter. Underwriters must adhere to strict compliance of regulations and underwriting guidelines that can differ from lender to lender. Understanding a bit about mortgages is helpful and will help to avoid unnecessary stress. But let's first look at the application process. Your Advisors Mortgage loan originator takes a loan application from, gathers information and required documents, and creates your loan application file. The loan officer then submits the application file to the processing department to begin processing your loan.
HOW DOES MORTGAGE PROCESSING WORK?
A processor is responsible for opening your application file and beginning the work of processing your documents. It is the processor's job to review all the documents submitted, make sure you qualify with the income provided, request any missing documents, and submit the loan to the lender's underwriting department. Processors often pick up on errors shown on loan applications, missing documents, and request what they believe they need for a complete application file. The processor is also responsible for the following tasks:
*Entering your data into the mortgage processing system
*Checking documents for accuracy and completeness
*Checking income documentation and qualifying debt ratios
*For reverse mortgages, examining the HECM Certificate for accuracy
*For FHA & HECM's: Ordering an FHA Case number OR transfer of an FHA case number
*For VA, examining your DD214 and other documents for VA loan compliance
*Ordering a title report to validate ownership of your home and assess any problems
*Obtaining updates on real estate taxes and tax bills
*Ordering an appraisal on your property to determine its value and condition
*Ordering homeowner's insurance info and verifying on-time payment history
*Ordering payoffs from your current mortgage company
*Submitting your application and documents to underwriting
*Advising the loan officer that the loan has been approved with conditions
ITEMS REQUIRED BY UNDERWRITERS PRIOR TO CLOSING
There are often last-minute but necessary items required by the lender to close your loan. These can include updating pay stubs as pay stubs expire; the most recent pay stubs must be reviewed before a final approval can take place. Lenders may also require verification of employment days before a closing. How do they know you still have a job? How do they know your income has not changed from what was shown on your application? They must verify year-to-date income from your pay stubs. Additionally, listing the lender as the mortgagee on your homeowner's policy is part of the pre-closing process.
Lenders conduct a final verification of all submitted documents to be sure your documents are correct. They do a quality control check, pull your credit report and verify your employment one last time. The last verification produces your final approval.
GETTING TO THE CLOSING TABLE
*Getting your loan ready for a clear to close by the underwriter
*Scheduling your closing and coordinating with all parties who need to attend
*Post Closing: Making sure your funding and payoffs are disbursed
NOTE: ON ALL REFINANCES, THERE IS A 3-DAY RIGHT OF RESCISSION PERIOD IN WHICH YOU CAN CANCEL YOUR LOAN. AFTER THE THREE DAYS HAVE PASSED, YOUR LOAN WILL FUND..
Mortgage Underwriting -The bottom line.
What do underwriters look for? Why is the process such a big pain in the neck?
Underwriters are most common in industries where transactions carry considerable risk. Each industry has their own underwriter specific to a particular business model with expert knowledge of their field, and in the case of mortgages, an underwriter must have a firm knowledge of mortgage lending.
It is the underwriter's job to compile data on a borrower to determine if a borrower qualifies for a mortgage loan.
A mortgage underwriter is responsible for analyzing documents provided by a mortgage applicant, assessing and evaluating risk to the lender. It is the underwriter's job to approve, suspend,or deny your mortgage application and ensure your loan will not default and that you have the ability to repay the loan. In order words, they are there to make sure you truly qualify for the mortgage. In short, they are just doing their job. If risks were missed that led to a borrower defaulting on their loan and the lender bears the cost, the underwriter can be held accountable for it. Underwriters also protect you from a mortgage you cannot afford.
The underwriter checks the validity of the documents you submit and makes sure you meet all the lender's requirements as well as regulatory requirements for the loan.
FHA Insured loans or HECM's (Reverse Mortgages):
The FHA underwriter's job is to ensure that all FHA applications and documents meet FHA standards and that the loan is insurable according to FHA underwriting guidelines. HECM loans are FHA loans and also require an underwriting review.
