Understanding Roles in the Home Mortgage Financing Process

Understanding Roles in the Home Mortgage Financing Process

If you are preparing to purchase a new home or are considering refinancing it helps to have an idea of who is involved in the transaction and what the various roles entail. Each person is an important spoke in the wheel and helps facilitate the process from application through closing.

Your loan officer will likely be your main point of contact throughout the process. The loan officer will either take your application information face-to-face or over the phone, quote your rate and provide you with an estimate of closing costs and APR (Annual Percentage Rate), and answer any questions you may have regarding how the process will proceed. With application complete, the loan officer will likely hand off the paperwork to a loan processor.

Processors typically handle the majority of the paperwork post origination. This entails ordering the appraisal and title work, and submitting the file to the underwriting department. After the original underwriting review, the processor works with the loan officer and the borrower to collect any outstanding items which may be needed to gain underwriting approval.

The underwriter's job is to review the application and the supporting documentation to ensure that everything meets the guidelines established by the lending institution. If anything is missing or appears not to fit the defined loan parameters, the underwriter will likely ask for additional supporting information.

Once the loan is cleared by the underwriter, it typically moves back to the processor who then works with the closing department to schedule the closing with the borrower's attorney or escrow agent. Some companies have in-house closing personnel while others, such as most brokers, use the closing department of the lender they have placed the loan with. The mortgage company's closing department will also send the closing documents over to the closing agent.

The closing agent handles the signing of the documentation at the end of the process. Typically the closing agent is a real estate attorney or an escrow agent. Post closing, the closing agent handles recording the note in the county records and dispersing funds as needed. Many times, the closing agent will also help coordinate the title search and title insurance processes. A title company reviews the title work to make sure that there are no unexpected liens on the property or to see if there are any abnormalities in the chain of title. Borrowers are typically required to purchase title insurance which insures an owner and/or lender against loss due to defects in the title.

Other people involved in the equation include the real estate appraiser and the real estate agent. The appraiser helps analyze and determine the value of the property. The appraisal will review the physical details of the property (i.e. size, rooms, age) and research comparable properties which have sold close to the subject property. It is the job of the appraiser to provide an independent opinion on the value of a home. With a majority of home purchases there are real estate agents involved. Real estate professionals often recommend several mortgage professionals whom they have worked with they believe have a proven track record. The real estate agent typically stays in touch with the loan officer and the borrower to make sure than the process is proceeding smoothly.

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