The loan processor: Dark cloud or silver lining?Patricia Wheelermortgage industry, communication with the borrower, clearing title items with escrow Historically speaking, processors have not made much of the money that has been generated in the mortgage industry. Brokers, by and large, have had a hard time rationalizing more than an administrative assistant's paycheck to their processors because they generally feel like all they're basically getting is an administrative assistant—someone to answer and screen the phones, fax conditions and follow-up with the client. On the other hand, if the broker is only willing to pay for a glorified receptionist, should that broker actually be surprised is that is what they end up with? What's a Mortgage Broker to do then? First and foremost, a broker in this position needs to admit the obvious: They've never had a real processor. As any broker who has had the luxury of truly outstanding processing will tell you, a real processor is most definitely not the receptionist—she's too busy working. A large frustration of many brokers is that they feel the need to micromanage processing. Unfortunately, this largely stems from brokers hiring people to process who are not actually trained as professional processors. However, by constantly hovering over files in process, valuable time that could be spent sourcing new borrowers and courting return borrowers is wasted and many opportunities are lost. An excellent processing staff is every bit as important as an excellent sales staff—and when both of these pieces are in place, you have lightning in a bottle. A processor should manage all aspect of a loan from the time the disclosed application package hits the office. This includes contact and communication with the borrower throughout the process, confirming product choice and details, gathering missing documentation from the borrower, clearing title items with escrow, making sure the loan profile matches the lender matrix, checking for compliance with the state's regulatory agency, and accounting functions. Since the current lending climate means that guidelines and programs are changing rapidly, a savvy processor will be able to help steer a broker's loan through those changes to ensure that loans don't die and that they are packaged to a lender's specifications. In other words, the processor should also be a sales assistant, doing as much as possible to keep the broker and loan officer free to pick up new files, not gathering conditions or making unnecessary phone calls to borrowers and lenders to best package a loan. It's like a marriage—the broker's talent and processor's talent should complement each other. On the one hand, many of the best sales people, frankly, have a slight case of Attention-Deficit Disorder (ADD), and detail is not their strength. On the other hand, a processor is filthy with minutiae. The Mortgage Broker or loan officer sells the product, and the processor works to make sure that the goals of the broker and borrower are met. The processor is both the custodian of the broker's commission and professional liability as well as the borrower's biggest asset—their home. When a knowledgeable processor is working through the file with the borrowers, surprises at the closing table can be largely avoided. The processor is the face of the loan to both the lender and the borrower, even if they are just a voice. At the same time that the processor acts as a sales assistant, they also act as an underwriter, since the actual "processing" of a deal should be (if you hired a real processor) no less than an initial underwrite of a file to the specifications of a chosen lender. By the time an underwriter actually gets the file, it should be as simple as validating what is in the file, and ensuring that the borrower and lender is, in fact, a good match. In the same way that two sets of eyes (the loan officer's and then the processor's) are crucial to putting the package together under the broker's license, two sets of eyes (the processor's and the underwriter's) are necessary to ensure that the package is sellable in the secondary market. Processors with any depth to their resume develop reputations and rapports with underwriters, funders and escrow officers, and they would do well to guard those reputations jealously. A good processor can raise the profile of a broker in the eyes of a lender, getting deals funded under lock deadlines and, where judgment calls need to be made by the underwriter or management, the reputation and performance of a broker's pipeline could very well be the deciding factor in whether or not a loan funds. Seasoned processors will also avoid "double-dipping" loans to more than one lender. Since it takes a small army of people to work on a loan, even if it doesn't fund, one way of keeping our processing halos shiny is by only opening title and escrow when it's a real deal and only submitting a loan when it's ready to go. Let's face it, high funding ratios keep lenders, brokers, title companies and escrow companies all profitable. And, the last time I checked, wasn't that the point? Now, if you had a processor that took care of all of that, wouldn't you start to see what a backbone processing is to your whole mortgage operation? Of course you would! It would be easy to see how a good processor is worth the money, how the processor easily pays for themselves, and, in the end, how a processor actually helps you grow your pipeline and profit margin. During these dark times in our industry, when money is tight and fundings are sparse, an investment in good processing can be the silver lining to an otherwise dim future. Patricia Wheeler of Specialty Mortgage Services may be reached at (714) 526-3467 or e-mail [email protected].