What Is a Mortgage Processor?
Once you’ve shopped around with a few mortgage lenders, made your pick and completed a loan application, your information gets sent to someone on your future lender’s team who is known as a mortgage processor.
This article will define and explain the role and responsibilities of mortgage processors, and why they matter in the homebuying process.
What is a mortgage processor?
A mortgage processor, also sometimes known as a loan processor, is the person responsible for preparing your mortgage application and other paperwork for delivery to the mortgage underwriter.
Their job falls between the loan officer, who works directly with the future mortgage borrower to choose a loan product and the loan underwriter, who makes the decision on whether they qualify for a mortgage.
The documentation a mortgage processor collects includes employment and income information, bank statements and monthly bills. When a mortgage processor is able to process a loan correctly, this can decrease the time it takes to hand down a decision about whether you qualify for the mortgage you’ve applied for.
The responsibilities of a mortgage processor
Mortgage processors are primarily tasked with ensuring all of the proper documentation is present in a borrower’s file, that all numbers check out and everything is organized in an orderly fashion.
“It’s a very complex job, to say the least,” said John Stearns, a senior mortgage banker with American Fidelity Mortgage Services in Milwaukee.
He said a loan processor’s role involves working with the loan officer, the underwriter and the closer. The processor is the one who orders the home appraisal and title insurance, as well as confirms the borrower’s employment information.
“A lot of the hard work is verifying all those things once they come back to make sure they’re accurate,” he said. “There could be mistakes; there can be information that is not complete.”
Loan processors also order tax transcripts from the IRS, verify Social Security numbers from the Social Security Administration and review the borrower’s homeowners insurance policy to make sure there’s adequate coverage and that the mortgage lender’s information has been shared with the insurance company. They also double-check that the borrower has sufficient cash to close the mortgage transaction, Stearns said.
Let’s say you’re planning to tap your 401(k) to cover your cash to close. A mortgage processor would need to see more than just a retirement account statement showing the money exists — the money needs to be moved to a liquid account, Stearns explained. The borrower would need to supply the following information to the processor:
- A copy of the check sent to you from your 401(k) provider.
- An updated 401(k) statement showing the withdrawal.
- An updated bank statement showing the deposit.
Additionally, loan processors review a borrower’s credit reports, credit scores and debt-to-income ratios.
Although the loan processor’s job involves double-checking all the borrower’s documents and information, the onus is still on the loan officer to review that information before sending it to the processor, Stearns added. For example, when a borrower submits their bank statements, loan officers should make sure there are no pages missing before passing those documents to the processor.
Processor vs. underwriter
While a mortgage processor makes sure your application, documents and supplemental information are all accounted for, mortgage underwriters are responsible for determining whether you meet the guidelines for the home loan you’ve requested.
Mortgage underwriters analyze your assets, credit and income to demonstrate your ability to repay the loan you’re trying to borrow. They also ensure that the home is in good condition, the home value makes sense and the property’s title can be transferred without any issues.
Underwriters must also be familiar with the lender’s guidelines and whatever mortgage program requirements are relevant to your application, such as Fannie Mae, Freddie Mac, FHA or VA.
“The underwriter’s going to make sure the file can be approved,” Stearns said. “They have the final say-so. If a file gets denied, it’s the underwriter who’s denying it.”
For more on the role and responsibilities of a loan underwriter, check out LendingTree’s explainer.
The bottom line
You may not always work directly with a loan processor. Most likely, you’ll interact with your loan officer instead. But you’ll want to maintain a great relationship with your processor, too, Stearns advised.
How? “Do some of the work yourself,” he said. “There are some things loan officer can’t do, but help them out; you’re a team here.”
Deliver each document and piece of information requested of you in a timely manner to ensure your mortgage file moves through the process with as few bottlenecks as possible.