What Do Loan Processors Do?

September 2, 2009 6 Comments »

processor

I’ve already covered the mortgage underwriter’s role, so let’s take a look at what “loan processors” do seeing that they’re also key to getting your loan closed in a timely fashion.

Once a loan is originated by the mortgage broker or loan officer, the corresponding paperwork is sent along to a loan processor.

The loan processor is responsible for prepping and organizing the file and getting it over to the bank or mortgage lender for approval.

Loan Processors Are Very Important

Loan processors don’t just grab the loan file and submit it; they double-check everything like debt-to-income ratios and employment information to ensure the file will actually be approved.

For this reason, they play a critical role in the loan approval process, as mistakes made by the loan originator could be caught and corrected before the file lands in the unforgiving hands of an underwriter.

After all, once it gets to the underwriter there’s no going back. Sure, you can fix some things, but not without a lot of red tape.

Assuming the loan is approved, the processor will receive a list of prior-to-document conditions (PTDs) that must be met before loan documents are released by the bank.

It is the processor’s job to work with the loan originator, title and escrow companies, and various others to get all the necessary paperwork to fulfill those conditions; and things can get very complicated in no time at all.

You May Spend More Time Working with the Processor

While the loan officer or broker may be the person who “got you the loan” to begin with, it’s the processor that will likely take over once you’ve been “sold.”

That sold part is pretty important because loan processors aren’t supposed to offer or negotiate mortgage rates or loan terms. Their role is to assist the originator, whose job it is to sell the rate/product, and organize the loan file.

However, some processors are actually more knowledgeable than the more sales-oriented loan officers because they handle more volume and may have more years of mortgage experience under their belt.

If the loan is originated via the wholesale channel (mortgage broker), there are essentially two loan processors working together on the file.

One who works on behalf of the mortgage broker and one that works at the bank, typically referred to as an Account Manager (AM).

The loan processor who works with the broker will essentially send conditions to the AM that works at the bank so they can be signed off.

If the loan is originated via the retail channel, the AM will work with the loan officer at the bank to get the conditions cleared.

Loan processors may also act as liaisons between the broker/loan officer and the underwriter.

In a nutshell, the loan originator hustles to bring in new borrowers and the loan processor hustles to get the loans funded, while both may irritate the underwriter in the process. : )

Loan Processor FAQ

Do loan processors need to be licensed?

Some independent processors might need licenses, but those working for licensed mortgage lenders or under the direction of licensed mortgage originators may be exempt. This can vary from company to company and by state.

Do loan processors make commission?

They certainly can and often do. It depends how they set up their pay structure with their employer. They may get paid per loan file funded or a base salary AND a bonus for a certain volume of funded loans each month.

How much do loan processors make per loan?

Again, it depends on the company and perhaps on what their base salary is. If their base is low or nil, they’ll probably make a lot more per loan. The downside is they are then working a performance-based job.

Do loan processors work weekends?

The job might require work on the weekend if a particular lender or broker is busy, or has busy periods. However, many processors just work Monday through Friday like most other bankers.

Do loan processors work from home?

They can work remotely or from home depending on the preferences of their lender or broker. Or if they’re independent they can run their own home office.

What are loan processing fees?

These are very real fees for the loan processor’s hard work. As I mentioned, loan processors might do more of the work once the saleswoman (or man) gets you in the door. This fee could be anywhere from $200 to $700 or more. Some may refer to it as a junk fee but only if it’s charged on top of a hefty origination fee. Sometimes the latter includes the processor’s work.

(photo: kozumel)

6 Comments

  1. TU May 9, 2015 at 9:33 pm -

    As someone who is versed in the industry. Would you be able to recommend a class/training method for someone who is looking to get into mortgage underwriting? thanks in advance.

  2. Colin Robertson May 11, 2015 at 10:01 am -

    TU,

    Typically whatever company hires you will have you go through a training course over the course of a few weeks. However, the best way to learn quickly is when you are truly hands-on. Generally you work under a more seasoned individual first, assisting them while learning about the processes involved.

  3. lydia hong July 27, 2015 at 3:38 pm -

    I just passed the test. Now, should I apply for Loan Officer or Processor. Which one is of “new comer”? And how do you get paid commission as realtor? Please help.

  4. Colin Robertson July 28, 2015 at 8:57 am -

    Lydia,

    A loan processor deals with lots of paperwork and basically assists the loan officer in closing the loan. Conversely, both loan officer and real estate agent jobs are sales job that require selling and finding clients. So it depends where you personality puts you. Real estate agents get a portion of the sales price, say 3%, but have to give some of it their listing brokerage. LOs also get paid commission for closing loans and processors may get an hourly and also bonuses for closings lots of loans each month.

  5. Liz September 3, 2015 at 8:31 am -

    Found a job posting for “Mortgage Loan Processor Trainee” and mentions no real estate experience needed. They only really require you have a high school diploma. Is this position really something one can pick up without any mortgage/real estate experience?

  6. Colin Robertson September 3, 2015 at 9:03 am -

    Liz,

    You can learn pretty quick on the job, like most jobs. You’d probably shadow someone experienced and help them out with basics (doing as they say, getting them X paperwork, etc.) and learn along the way.

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