How to become A Loan Processor

To individuals or businesses in excruciating need of a loan, Loan Processors are dependable and dedicated financial wizards who will do their best to get the loan approved. They ensure all the requisite documents are in order and are on the constant lookout for any red flags along the way. 

• Mortgage Processor
• Mortgage Loan Originator
• Retail Mortgage Processor

What do Loan Processors do?

A Loan Processor would typically need to:

• Act as a link between loan-seeking customers and financial institutions to facilitate the evaluation of the clients’ assets/repayment abilities and approval/decline of their loan requests
• Work hand in hand with mortgage brokers and loan officers to manage the client’s paperwork and help submit the documents
• Collect the client’s financial documents; confirm the correct ones with accurate information, as required by the underwriter, are submitted
• Gather documentation that includes tax returns, wage & tax statement, salary income, proof of insurance and evidence of assets and debts
• Compile and analyse the client’s credit report; look for any inaccuracies, late payments and collections
• Obtain letters of explanation from the client to enhance the understanding of a loan
• Request written/electronic verification of the client’s employment or bank accounts
• Examine how the client handled payment of past bills to confirm they can pay off future mortgage payments
• Ensure the client has a good credit score to increase the likelihood of getting approval for a home loan
• Track specific deadlines of the client’s mortgage application timeline to ensure they close on their house on time and avoid costly lock extension fees
• Liaise with the title, escrow and insurance companies, county clerk, attorneys and other professionals, as required
• Make sure deadlines such as finding a home, making an offer and completing the title work, home appraisal, mortgage underwriting and final loan
• Ensure the approval is within lending guidelines; keep the client abreast of the loan status
• Work directly with the underwriter to finalise the application process after ascertaining the transition of all the proper compiled documentation
• Partner with an escrow or closing agent to schedule the signing and to confirm the cash required by the client to make the down payment and pay closing costs

Often, Loan Processors work in a fast-paced and challenging office environment. Some LPs can work remotely or from a home office if they remain accessible to their clients. 

Loan Processors typically work regular business hours, Monday through Friday. However, they are ready to work on Saturdays, if need be.

Finding a new job might seem challenging. Job Processors can boost their job search by asking their network for referrals, contacting companies directly, using job search platforms, going to job fairs, leveraging social media and inquiring at staffing agencies. Self-employment is not a standard option since LPs have to work with licensed loan officers and underwriters.

Job Processors are generally employed by:

• Banks
• Realty Companies
• Mortgage Companies
• Financial Institutions
• Brokerage Firms
• Automobile Dealerships

Professional associations and organisations, such as The National Association for Mortgage Processors, are crucial for Loan Processors interested in pursuing professional development or connecting with like-minded professionals in their industry or occupation.

Membership in one or more adds value to your resume while bolstering your credentials and qualifications.

• Lapse of attention to detail in the fast-paced work environment can have serious consequences
• Lack of effective communication with all stakeholders could mean an expensive delay in the loan process
• Careless data entries
• Failure to keep the loan originator in the loop can slow down the mortgage application process
• Failure to use an easy-to-navigate mortgage Loan Origination System can make compliance obligations cumbersome and time-consuming and lead to customer dissatisfaction
• Working with an inefficient underwriter may lead to rejection of the file due to improper filling of forms and incorrect verification of the titles and documents

Most Loan Processors are promoted into the position from within the organisation. That being said, prior employment with credit unions, mortgage lenders and banks should also facilitate an aspiring LP’s entry into the field. Read about the profession and interview/job shadow experts working in loan processing to prove your commitment to course providers and prospective employers.

There is more than one academic path to becoming a Loan Processor (LP). A high school diploma or GED (General Education Development) is the minimum educational requirement at many loan companies. 

However, most employers prefer applicants with a bachelor’s degree in business administration, accounting, banking, real estate or finance, although some will accept an associate degree as long as the candidate is familiar with the basic concepts of financial management and banking practices.

Take advantage of loan processing certificate programs comprising underwriting principles, the approval process, loan processor duties, credit counselling, fraud detection and basic appraisal principles.

Focus on algebra, geometry, statistics, loan processing, and office productivity software during high school. 

Your national mortgage association may offer Loan Processor certifications based on the level of training required. A diploma from an objective and reputed organisation can help you stand out in a competitive job market, increase your chances of advancement and allow you to become an independent consultant.

Successful certification programs protect public welfare by incorporating a Code of Ethics.

The first level of certification may qualify new LPs with no experience as a Certified Purple Processor (CPP) after completing at least six hours each of basic and advanced loan processing training, scoring a minimum of 85% and making it through a background check.

To become a Certified Master Loan Processor (CMLP), an LP with five years of mortgage experience must complete at least 24 hours of training that may include basic and advanced loan processing and underwriting basics, processing housing administration and loans for veterans. The minimum passing grade is 85%, and candidates must go through a background check.

LPs with fifteen years of mortgage experience may wish to acquire the advanced Certified Ambassador Loan Processor (CALP) certification. They may need to complete at least 42 hours of training that includes all the topics covered in the CMLP exam in addition to a special housing administration rehab programme, analysis of tax returns and mortgage fraud awareness & prevention. The minimum passing grade is 85%, and candidates must go through a background check.

Success in an accredited mortgage education pre-training program should fetch you the mandatory mortgage license, although the process may vary across locations. Further, LPs who take, offer or negotiate residential mortgage loans must obtain a mortgage loan originator license.

Performance, experience, and the acquisition of professional qualifications drive the career progression of Loan Processors. 

The size of the bank that employs you will determine your career path as a successful LP. Smaller organisations may offer limited growth opportunities. However, larger banks and financial institutions can expedite promotion to supervisory positions such as Officer Supervisor or Office Manager.

Additional qualifications and training would enable you to assume the role of an Underwriter or Loan Originator.

Candidates who have an associate or a bachelor’s degree in business, accounting or finance along with relevant work experience have the best job prospects.

Continuing professional development (CPD) will help an active Loan Processor build personal skills and proficiency through work-based learning, a professional activity, formal education, or self-directed learning.

Most of an LP’s training is on the job. Officeholders without a bachelor’s degree gain real-world experience while attending classes to work toward other areas of mortgage loan processing. LPs with significant experience find it easy to work their way up to better financial positions.

Your work experience coupled with a certification from your national association of loan/mortgage processors will prove your aptitude and likelihood for success.

The Busy Lending Season

The needs of the mortgage industry keep changing throughout the year, with more workforce required during the lending season. Outsourcing to mortgage service providers during the busier months will allow lenders to have a cost-effective, scalable team to handle complex data entries.

Current Scenario

Technological advances have decreased the need for loan processors as more individuals use the Internet to secure loans. However, the potential for their growth is fair due to the jobs that will fall vacant as older workers retire and active workers are promoted to management.

A Brief Explanation of Technical Terms

A loan application is a form of request presented by an individual to a financial institution for the approval of a loan. It includes detailed information regarding the loan seeker’s identity, financial competence and sources of income to suggest their ability to repay the loan.

An appraisal report is any written or oral communication from an appraisal, review or advisory service sent to the client at the end of the appraiser’s examination of the property.

Title companies perform various legitimacy checks on pieces of real estate before releasing title insurances to safeguard citizens from any ownership disputes and proprietary lawsuits against the owner or lender. Some title companies also manage client escrow accounts to ensure insurance funds are used for residential purposes.

Credit reports are statements that carry information about the client’s credit affairs and current credit situation, such as loan payment history and credit accounts status. Potential lenders and creditors make vital decisions about offering loans to a particular client based on their analysis of the latter’s credit report.

Escrow refers to a third party who holds money or assets in their custody on behalf of other parties involved in a commercial transaction. A lender deposits an escrow amount of the mortgage into another party’s account every month and handles the insurance premiums plus the estate taxes.

Studies show that 88% of homebuyers rely on a mortgage to finance the purchase of their home. Most buyers put only 10% down and get loans to cover the cost of the remaining 90%.

It might seem like they are the inhabitants of a crazy world with fantastic expectations. Still, Loan Processors play a crucial role alongside underwriters and loan officers to help individuals and businesses keep their loan applications on course for closing.

Follow all public loan guidelines consistently while remaining open and accessible to your clients. Never over-guarantee or under-convey.