Fourth Step - Processing

Loan Processing

The "processor" reviews the credit reports and verifies the borrower's debts and payment histories as the VODs and VOEs are returned. If there are unacceptable late payments, collections for judgment, etc., a written explanation is required from the borrower. The processor also reviews the appraisal and checks for property issues that may require further discernment. The processor's job is to put together an entire package that will be reviewed by the underwriter.

Underwriting

The underwriter is responsible for determining whether the combined package passed over by the processor meets all the lender's criteria.  A loan decision will be issued based on four factors - income, assets, credit record, and property value. An Underwriter will review the information on your loan application and the information collected on your behalf. If more information is needed, the loan is given a "conditional approval" and the borrower is contacted to supply more documentation. Additional information or documentation as required by the loan program guidelines may be requested.  These conditions must be removed in order to receive funding approval.

"Mortgage insurance underwriting" occurs when the borrower has less than 20% of the loan amount to put towards a down payment. At this time, the loan is submitted to a private mortgage guaranty insurer, who provides extra insurance (PMI) to the lender in case of default. As above, if more information is needed the loan goes into “conditional approval”.  These conditions must be removed in order to receive funding approval.

Loan approval

At the loan approval stage, a title/escrow company, a neutral third party, is assigned to ensure that all parties receive what they are entitled to. Your Loan Officer will check with you to schedule the signing of the loan papers at the location of your choice.  Documents are then ordered and submitted to the title/escrow company, giving the title/escrow officer at least 24 hours to review the documents, comply with the lender’s instructions, and draw up the papers for your signature. 

Pre-Closing

Before the closing, schedule a final walk through of your new home to make sure it is ready for you and to ensure that any contingencies specified in the commitment letter about the home’s condition have been satisfied.
Prior to the closing you must obtain homeowner's insurance with a carrier of your choice. This information must be provided to your Loan Officer or Escrow Agent within 72 hours of closing. Your Loan Officer or Escrow Agent will provide you with the amount you will need to bring to closing. Funds needed for closing must be in the form of a certified check or cashier's check.  Your Escrow Agent will go over the settlement charges with you and have you execute the Lender’s Note and other applicable closing documents.