Residential Magazine

Competing Philosophies

An originator’s level of involvement in due diligence can make a major impact

By Jeff Willis

One approach for a mortgage originator is to first and foremost be a sales executive. Their job is to get business in the door and then move onto the next prospect. Anything that gets in the way is considered clutter — including but not limited to processing duties. This approach can be called “quick look.”

Another approach requires the originator to be more involved in the loan’s upfront due diligence. The originator attends to such duties as credit pulls, putting an application through a desktop underwriting program and checking mortgage insurance tabulations. The file delivered to the senior underwriter is expected to be more complete and take less of that person’s time. This model can be called “one look.”

There are pros and cons with each of these strategies. Mortgage originators and other industry professionals should have a clear grasp on what these approaches can mean for their company. 

Quick look

In the quick-look model, originators are trained to obtain all necessary documents prior to submitting applications. Upon procurement, the application is submitted to the processor, who pulls the credit report and runs the desktop underwriting program. 

Prior to the Truth in Lending Act and Real Estate Settlement Procedures Act, or the TILA-RESPA Integrated Disclosure (TRID), the originator prepared disclosure forms. Since TRID, this duty is assigned to a specially designated party in close communication with both the originator and processor. 

Other than fielding questions from the borrower and overseeing the rate lock, the originator is done. The processor, sometimes referred to as an assistant, essentially takes over by organizing the file; ordering a title search, survey and appraisal; and getting disclosures to the borrower. They often establish a rapport with the client. They are not allowed to discuss rates unless they hold an originator’s license.

Many lenders have both junior and senior underwriters. In some instances, the junior underwriter’s title is processor. Junior underwriters have been described as gatekeepers. In the quick-look approach, they work directly with the originator’s processor. 

Under the quick-look method, the senior underwriter determines what information is needed from the borrower, sending the file back to the processor via the junior underwriter. Together they clear the remaining loan conditions. The senior underwriter subsequently signs off on the loan by issuing a clear-to-close letter.

The quick-look model generally necessitates less-intensive mortgage software. Calyx is, by far, the choice of these organizations. Although not as detailed, it is easier to learn and is excellent for less computer-savvy originators. 

The ideology behind one look is that a senior underwriter’s time is more valuable than that of the mortgage originator.

One look

With the one-look approach, the goal is to reduce the senior underwriter’s time with files. It is the job of the junior underwriter (referred to as a processor by some lenders) to anticipate what the senior underwriter will require. They subsequently instruct the originator to procure what they deem necessary to gain loan approval.

In this system, the originator is expected to submit complete files. The difference comes with administration. The one-look approach encourages the originator to be more proactive in processing. In theory, it is more efficient to have the originator attend to such file-preparation duties. This includes but is not limited to organizing, stacking and submitting the files to the junior underwriter.

Upon receipt of the file, the junior underwriter scrubs it by taking a look to make sure all the pieces are in place. If it is determined that the file has missing material, a notice of incomplete (NOI) is sent to the originator. All file movement abruptly stops until the originator has satisfied what constitutes the NOI.

The one-look approach mandates that originators maintain total dialogue with the borrower. This includes requests for updated documents such as bank statements and pay stubs. As with the quick-look model, the originator locks the rate. The junior underwriter rarely has communication with the borrower.

The ideology behind one look is that a senior underwriter’s time is more valuable than that of the mortgage originator. If the originator takes on more processing duties, the chances of a compliance miscue are theoretically reduced, although this can be debated.

Encompass is overwhelmingly the software choice for the one-look method. Encompass requires more time to input loans, but it is decidedly more complete. Compared to Calyx, it is less-user friendly. It contains more features, many of which are compliance checks. 

The downside of the one-look approach comes from the tendency for originators to become so engrossed in processing that they have little time for sales.

Pros and cons

The quick-look objective is to allow the originator as much selling time as possible. This translates to less time devoted to administration. Historically, the rationale behind originators preparing loan estimates was that it made them more aware of the loan costs. 

Handling client objections is easier with the quick-look approach. The originator is able to more quickly break down the closing costs versus prepaid items for the borrower. Loans can be scrapped due to escrow misunderstandings. The quick-look originator is typically better prepared to handle questions and objections relating to rate, escrow and the loan in general. 

The downside to quick look comes from the need for more experienced and well-rounded processors. The originator’s processor assumes more duties and must be careful not to discuss rates with borrowers. In some instances, contract processors are licensed and may discuss rates. Although quick-look originators are generally better with business development, they are usually weaker with computers and related paperwork. As a result, processors must often become specialists in areas such as the internet, business machines and even mail delivery. 

For one-look originators, the primary objective is to maximize the senior underwriter’s time to the fullest extent. When senior underwriters are allowed to spend less time with files, they can underwrite and sign off on a larger number of loans. 

Because the junior underwriters are assuming more responsibility, they are better equipped to move into a senior underwriter’s position more quickly. By requiring more administrative input from the originator, there is less likelihood for a compliance oversight. One-look originators are almost always better with files than quick-look originators.

The downside of the one-look approach comes from the tendency for originators to become so engrossed in processing that they have little time for sales. In reality, their job is more clerical than a true sales position. Junior underwriters are often overzealous, asking originators for more information than is necessary for the senior underwriter to make a determination. Without question, one-look originators are asked to do more paper chasing than their quick-look counterparts. As a result, one-look originators must be more computer savvy than quick-look originators. 

Quick-look originators are more in line with mortgage consultants. They are more at home sizing up an individual client’s needs and matching them to the available products. Quick-look sales managers operate, in many ways, like senior law partners. They assess an individual case and make their own recommendations. Their one-look counterparts are more reminiscent of traffic cops, following the instruction of the processor to fill any voids that might have created by the originator. 

Gray areas

Mortgage origination always involves certain amounts of gray area. In the one-look method, any gray area is owned by the originator. Senior and junior underwriters enjoy responsibilities that are quite defined. Any duty or action not outlined in their job description is presumed to fall under the loan originator’s responsibility.

The quick-look approach maintains that any duty not involving sales, disclosures or pricing is best handled by the processor. There are two reasons for this. The processor is more accessible and better able to communicate with the junior underwriter, resulting in less dead time. And gray areas are often more related to processing than sales.

With one-look companies, the loan originator is more involved in processing, meaning that these businesses can sometimes operate without an on-site processor. A quick-look company’s processor will generally be more expensive because they need to do more work to free up the originator’s time. The rationale is simple: If the loan originator is engaged in processing activities, he or she is not selling.

The general thought is that underwriters will register longer tenures when working with banks or mortgage companies that employ the one-look approach. Their duties are black and white, allowing them to dictate the pace of file movement. 

Originators tend to stay longer at quick-look companies. Veteran originators are quick to depart from jobs that require too much paper chasing, or too much time completing applications and clearing conditions. Quick-look originators enjoy more time to devote to sales. This translates to more income and ultimately promotes stability. ●


  • Jeff Willis

    Jeff Willis is a mortgage consultant for Peoples Bank. Originally from El Dorado, Arkansas, Willis graduated from Louisiana State University with a double major in journalism and history. He worked in broadcast television for 20 years before switching to banking and financial services in 1999. He authored the book, “E is for English” in 2010. He has lived throughout the South and traveled extensively to Europe as well as Russia. He is conversant in Spanish and Russian. The statements in this article are solely the opinions of Willis and do not necessarily reflect the views of Peoples Bank or its management.

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