What is Loan Origination Process?

In general, Mortgage loan origination services involves application acceptance, application processing, underwriting of the loan, and release of the loan amount. Every Mortgage lender has their unique way of operation in the loan origination process. It’s important that all the “boxes are checked” so the process can move forward without errors. It’s a critical process for customers as well. For most applicants, there is a lot riding on a mortgage being issued, it can be a tense time for them and that adds extra pressure for accuracy.

for lenders, The complexity of the process makes an experienced, professional staff a key element for in continuing, successful operation. But the job market is a highly competitive and volatile one, with the best producers commanding higher and higher wages and other compensation.

Making this sector a prime opportunity for a Business Process Outsourcing firm- a BPO. The services of a BPO can eliminate many of the high costs of training and retaining an efficient staff.

The usual functions performed by a mortgage loan origination staff include:

• Application analysis or Prequalification
• Loan Application Submission
• Application Processing
• Underwriting Process
• Credit Decision
• Quality Control
• Loan Disbursement

• Application analysis or Prequalification: A borrower has to qualify by submitting the requested documents. In general, the list comprises the following documents:

• Employment information along with proof of income
• Individual as well as family income declaration
• Bank statements
• Existing loan declaration
• Latest Tax Returns

• Loan Application Submission: It’s the second most important step in loan the origination process. In this stage, after collection of required documents, an application is submitted by manual document submission, or it can be processed electronically. Often mortgage companies struggle with electronic applications as it requires an additional, time-consuming skill- document digitization. While the process is part of the service of a BPO, it might be a challenge to some office staff. And if not handled correctly, it can adversely affect the whole process.

• Loan Application Processing: A digitized loan application is reviewed by the credit department using the following parameters,

• Document’s completeness
• Document’s validity
• Accuracy of the data

Based on an analysis of these parameters an application is either accepted or rejected. If the application is accepted, it enters into the next stage. If the application is rejected, then it goes back to the applicant or the analyst who removes the discrepancies by reviewing and correcting the required documents and resubmitting the application for review.

• Underwriting Process: Once the loan application is accepted, the underwriting process begins, examining the following parameters:

• Credit Score
• Risk Score
• Title Survey
• House Survey
• Income Verification
• Employment Verification
• Income to Debt Ratio

• Credit Decision: Based on the analysis of the underwriting process, a decision will be made to accept or reject the loan application of the borrower. This decision may vary based on the following parameters,

• Loan amount
• Interest rate to be charged
• Loan duration

• Quality Control: The mortgage industry is highly regulated; quality control is an essential step to adhere to the required guidelines. This is the last filter before the disbursement of loan funds to borrowers. In this step, an application is cross-verified according to the government and industry guidelines.
• Loan Disbursement: This is the final step; the borrower receives the requested loan amount. This concludes the loan origination process, though each step is of equal importance and has to be followed diligently.

A mortgage company can improve, streamline, and reduce the cost of the process by opting for outsourcing much of the process:

• Digitization of loan application forms
• Verification of documents
• Employment verification
• Quality control by a third-party service

Rely Services Inc. offers the above-mentioned services to various mortgage loan processing companies. For more details, write to us at info@relyservices.com or you can reach us at (847) 310-8750.