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].
