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.
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 assist mortgage brokers and loan officers
- By compiling important paperwork from the borrower
- And looking out for any red flags along the way
- Before submitting the loan file to the underwriter
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
- It’s common to talk more with the processor than with the loan officer or broker
- Once you submit your loan application they may be your main point of contact
- Since LOs/brokers have to spend more time selling and finding new prospects
- The good news is processors are often very knowledgeable and hardworking
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.