Mortgage originators should do what they do best — originate loans. Too often, these professionals are too busy to do that.
That’s because they’re chasing down pay stubs, securing tax returns, ordering insurance and title work, tracking appraisals and responding to underwriter inquiries. Although this work is traditionally done by an in-house mortgage processor, many mortgage shops — especially the smaller ones — don’t have that capability.
Now, there’s a way to get this work done and free up the mortgage originator to write more loans. It makes sense to hire a third-party processor, an outside company that can track down this information. This new breed of mortgage-industry vendor can do the work in a secure, compliant, accurate and, most importantly, cost-effective manner.
The fee for this service is paid by the borrower at closing. So, there is no cost to the mortgage originator if it is disclosed properly. This fee is like any other third-party fee such as title work, insurance or an appraisal on the loan estimate. It doesn’t affect the mortgage originator’s compensation at all. In fact, the fee doesn’t count against the 3 percent points and fees cap for qualified mortgages.
There can be any number of reasons why a mortgage company doesn’t have an in-house mortgage processor. The business may lack the space, have an irregular loan volume or can’t afford the cost of a full-time processor. A third-party processor solves this problem.
This service provides experienced processors who are available during business hours to work the details of getting a loan approved. Again, the third-party processor does not impact an originator’s compensation. Originators can disclose this service on the loan estimate as a vendor charge, and the originator derives all of the benefits of having access to an off-site processor for that loan.
Professional third-party processing companies are available to assist originators. When getting ready to write a loan, an originator frequently has specific questions that a third-party processor can answer. This enables originators to be able to call and run a scenario by their third-party processor to get a good idea how to proceed with the loan.
Third-party processors handle the loan applications that the mortgage originator delivers. The originator completes the loan application, selects a lender and associated fees, obtains the qualifying credit report and applicable supporting documentation, then delivers the loan file to the third-party processor.
After the lender gives preapproval, the third-party processor ensures all the documents are ready to close. If an underwriter comes back with questions or additional conditions, the third-party processor can help clear this up. The outside processor will review the conditions for completion as well as help track the documentation.
A third-party processor can work with the borrower on behalf of the originator and the wholesale lender to prepare for a closing. Additionally, the third-party processor assists originators with technology solutions that enable the collection of required borrower information in an organized fashion. This helps consolidate the information, reduces the required steps for completing the processing and helps expedite the loan to closing.
One of the benefits of a third-party processor is it allows a portion of the mortgage company’s business to be done while avoiding the fixed expense of an in-house processor. That overhead includes not only the salary, taxes and benefits of the in-house processor, but also their equipment, office space and other costs. In this way, a third-party processor allows the originator to have the loans processed with limited overhead and maximum experience.
Third-party processors exclusively process loans that close with mortgage wholesalers, while in a mortgage company a processor generally has many duties and responsibilities. In-house processors are often required to multitask and are not dedicated solely to the completion of the processing. Instead, they often handle other administrative duties such as reception or bookkeeping. A third-party processor has one job — processing a loan to close.
This updated and upgraded vendor category of residential mortgage loan processors understands both originator and borrower needs. This makes the process of closing loans efficient, automates workflow, maximizes speed and maintains communication between everyone involved in the mortgage application.
When hiring a third-party processor, make sure that the business has access to the latest technology. This ensures that the processing company can move your loan along with speed, accuracy and a proven understanding of lender portals and their requirements. If audited, a processing company can help you provide whatever the auditor requires, including necessary documentation. The processor only gets paid if the loan closes.