Mortgage loan processing is completed by an employee titled as either a mortgage loan processor or mortgage loan assistant. These employees gather the needed material to determine the eligibility of a borrower and then compare the information against a preset level of criteria to determine if a borrower meets or exceeds the requirements for approval for a mortgage with that lending institution.
The first thing a mortgage loan processor does is to determine if all of the proper paperwork is in the borrower's file. This paperwork typically consists of two months' worth of bank statements and pay stubs, as well as two year's worth of W-2 forms and income tax returns. The processor also combs the borrower's application to see if any additional documentation is needed from the borrower.
If the mortgage loan officer has not completed a credit check on the borrower, the mortgage loan processor pulls a copy of the borrower's credit report from the three credit bureaus: Equifax, Experian and TransUnion. The processor then reads through the credit report to determine if the borrower's credit score is high enough for qualification. Additionally, he checks to ensure that the are no negative items on the credit history, such as judgments, liens or collections.
Once the processor determines that the file is complete and that there are no obvious "red flags" in the file that automatically disqualify the borrower, the processor sends the file on to underwriting. The mortgage underwriter make the final call as to the borrower's eligibility for the mortgage loan. If the file is approved, it is sent back to the processor with the prior-to-closing conditions. If the file is denied, it is sent back to the processor with the statement of denial. At this point, the processor and the mortgage loan officer review the denied file and determine if any adjustments, such as providing the underwriter with additional paperwork, need to be made to change the denial to an approval.
If the underwriter approved the file, the file is sent back to the underwriter with prior-to-closing conditions. These conditions must be met prior to the closing of the mortgage in order for the lending institution to finish up the loan. In most cases, this is simply extra paperwork needed to further prove the borrower or the property's eligibility for the loan. Once these conditions are met, the underwriter moves onto the next mortgage loan for processing.