The mortgage approval process requires many steps and stakeholders in order to finalize the loan. The borrowers must collect and supply various documentation, and the internal lender teams then have to process the information, which includes multiple departmental approvals. After the borrower delivers the required documentation to their loan officer or contact, it is passed to the mortgage processors to begin the underwriting process.
The underwriting process has three high-level areas that must be completed in order to finalize the approval process. They are:
- Financial Review. First and foremost, the borrower’s financials – either their employment (for a personal loan) or the corporate financials (for a commercial loan) – need to be sound in order to obtain a loan. To verify this, the lender’s application package requests various documents be provided and then reviewed for financial soundness and mortgage compliance.
- If any concerns come up during this review, it can often lead to additional conditions being added in order to get approval or further review being requested from the lender’s legal team.
- Issuing an Appraisal. Following acceptance of the offer on a property and a signed contract, an appraisal is ordered by the lender to verify, via a third party, that the offer amount accepted is appropriate based on other comparable properties in the area.
- Obtaining a Survey & Title Insurance. Financial lenders have a fiscal responsibility to confirm that there are no issues with a property before a purchase is finalized and the loan is issued. A title search and survey must be ordered and completed ahead of time to verify that the property can be transferred legally and the title insurance can be issued without any impediments.
With each of these steps come multiple handoffs through various teams. If anything is missed or overlooked, it can stop the entire process and prevent the loan from being finalized. Having teams in place to oversee the entire process and make sure that the various subsets of the process are working together smoothly can prevent unnecessary oversights and holdups.
Using an underwriting support service to oversee and/or implement each of the processes can expedite the workflow and improve loan turn times, while preventing any costly oversights. A dedicated service provider will:
- Have an experienced and dedicated team that generates accurate and applicable loan disclosure documents and can verify that the correct information is being requested (for the borrower to complete the documentation) before hand-off into the next phase of the underwriting process.
- Use dedicated reviewers to verify that all documentation in the application package content is complete, the information provided is accurate, and any red flags are noted and resolved in a timely fashion.
- Manage the communication flow with one contact point that can order, track, and keep the appraisal, survey, and title process moving forward in a timely fashion in order to streamline the process.
- Have attorneys review documentation that is sent up the chain for compliance and regulatory questions, financial due diligence inquiries, fraud and risk assessment (based on the loan types), and loan value confirmation to provide reassurance that there is a low risk of loan default.
- Provide loan QA at various stages, including pre-funding and pre-closing, to prevent oversight by internal processors who have their own individual responsibilities during the underwriting process.
If your organization is looking for ways to improve efficiencies and create cost savings within your underwriting and loan processing, contact Baer Reed today for more information.
- On May 14, 2021
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