What does a Mortgage Loan Processor do?

What does a mortgage loan processor do, and what does it mean when your loan is “transferred to a processor?”

Once you and your loan officer choose a mortgage and start your official application, a loan processor will take over. He or she may serve many functions, including:

Entering your application information into the lender’s software system
Updating credit reports, ordering appraisals, requesting title documents and other services
Informing you of underwriting approval and guiding your loan from loan approval to closing

Essentially, a loan processor is the invisible person who puts together your loan submission file and keeps it on track behind-the-scenes.

What does a mortgage loan processor do?

You’ll receive an introductory call or an email from your processor shortly after your purchase contract is accepted by the sellers or deciding to go through with your refinance. That is, once your loan officer or mortgage broker has helped you choose a mortgage product, determine an interest rate and register your home loan with a lender.

Your processor will order verifications from your employer, bank and others to back up your documents and statements. Processors often open escrow, order mortgage insurance policies and flood certificates, set up appraisals, get title insurance, and create a file organized to lender’s very exacting specifications.

Automated Underwriting Systems (AUS)

Most mortgage programs can be underwritten electronically. They evaluate your debt, income and credit information and make one of four determinations. Be assured that your determination is “Approve”, otherwise a pre-approval letter or a refinance savings worksheet would not have been issued by your loan officer.

Approve, which means that as long as the paperwork you bring in backs up what you claim on your loan application, and the property meets the lender’s guidelines, you can probably close
Refer, which means there are gray areas that must be examined by a human underwriter
Refer with Caution, which is almost certainly an application decline unless the software is getting incorrect information, as it might in the case of identity theft
Out of scope / ineligible, which simply means you don’t meet the program guidelines. For instance, your loan amount might be higher than the maximum allowed by the program

The software also generates a list of documents the lender must supply to back up the information provided on the application. It’s the processor’s job to get that documentation from you. He or she may have to adjust the application if the information doesn’t exactly match the documents.

Suppose that you state that you earn $4,657 a month. But the processor’s calculations from your recent pay stubs show $4,557 a month. Your processor must update the application and resubmit it, just to make sure that the change did not impact your approval or the lender requirements.

Dealing with underwriters

Your processor will likely take on many tasks that you’ll never know about. An underwriter may ask for proof that your business is legit, for instance, if you are self-employed. To save you time, the processor may simply get copies of your business license from the county without asking you to bring them yourself.

Note that no lender allows consumers to contact underwriters directly. They’d never be able to do their jobs, and they must also be impartial. Your processor or loan officer will always be your go-between.

If you have questions about the status of your mortgage application, your processor may have more details than your loan officer. He or she may be your main point of contact until closing. That’s not putting you off with a “lesser” employee. It means you’re connecting with the person who has the information that you need after your loan officer locks your interest rate.

Working with your mortgage loan processor

The processor’s main function is to make things as easy for the underwriter as possible, increasing your chance of a good outcome.

This means he or she is working on your behalf and your interests are aligned. Try to respect this valuable employee’s time by not ignoring requests for documents, explanations or other items. Return phone calls and kindly spare these people any lectures on why you should not have to come up with your divorce decree / proof of asset deposits / letters of explanations / any other documents requested by an underwriter. Mortgage underwriting guidelines are often illogical, but we have to deal with them, nonetheless!

Processors don’t make lending decisions. But they can affect those decisions, and difficult clients yelling at them or calling a dozen times a day can cause them to miss an important detail. Or perhaps keep them from working extra-late to move your file through faster. Few processors work on commission, so extra effort on your file does not generally translate to additional pay for them. Be cooperative, appreciative and nice. It might help you with your loan approval, and a little good karma never hurt anyone 🙂

Relevant links:

Our loan application can be found here or you can call us at 314-329-7314 to speak with one of our loan officers. Also, here is our pre-approval page, if you are looking to buy a home.

Posted by: Carlson Mortgage – a St. Louis mortgage broker providing home loans in the state of Missouri. We are routinely ranked as a #1 mortgage broker in Missouri on Yelp, Google and Zillow. We can be reached at (314) 329-7314 seven days a week. Let us be your source for some of the lowest mortgage interest rates in St. Louis on first-time home buyer, conventional, FHA, Veterans (VA), Jumbo and condominium (condo) financing. Since 2004, we’ve been providing home loans and mortgage services in St. Louis that are tailored individually to your unique needs and to your financial situation. Our loan officers speak English, Spanish and Russian. Call us today to inquire about home loan interest rates, to get pre-approved for a purchase or a refinance mortgage, or if you have any general mortgage lending questions.