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About Contract Processing
Contract processing involves reviewing and approving loans for closing, requiring input from various departments such as underwriting, accounting, legal, and operations. Contract processing companies are responsible for finalizing each loan before it can close, ensuring that all aspects of the home loan are completed. This includes confirming that all required documentation has been submitted and addressing any contingencies, such as bankruptcy or divorce, before granting approval.
A contract processor reviews title insurance policies, ensures that all necessary signatures are collected, verifies lender requirements, and checks for errors in legal documents before they are sent to the underwriter. They must be well-versed in mortgage lending rules, real estate law, capital markets, and finance theory. Strong attention to detail and exceptional reading comprehension are essential skills for this role.
Contract processors use their expertise in lending guidelines, rates, and closing costs to provide valuable insights on how to best handle each loan. They act as intermediaries to ensure clear communication and alignment between all parties involved, facilitating a smooth and favorable outcome.
Outsourcing mortgage contract processing can be advantageous for many businesses. It eliminates the need for investing in costly equipment, software, and internal staff, which can reduce costs and allow you to focus on generating new loans and maintaining client relationships.
Additionally, outsourcing can help companies manage high volumes of contracts efficiently, scaling operations as the business grows while keeping overhead low, especially during slower periods.
In the context of mortgage lending, contract processing is a critical component. Handled by contract processing companies, it involves several detailed steps that ensure a mortgage application is evaluated thoroughly before a decision is made. Here are the four main steps involved:
Pre-qualification: Initially, the borrower's application must be thoroughly reviewed. This includes checking all personal information, employment history, credit history, and any other relevant data that affects the borrower's ability to repay the loan.
Registration, Disclosing and Submission to Underwriting: The next step in contract loan processing involves registering the loan with wholesale lenders such as UWM, Rocket, and the Loan Store. It involves inputting the fees of the transaction and sending the disclosures to the borrower, as well as submitting the borrower documentation to underwriting.
Clearing Conditions and Closing: The next step is to clear conditions and close the loan. This involves making sure all documentation passes the underwriting process and schedule the closing with title.
Post-Closing: This is the process that takes place after a loan has closed. The "trailing" documents need to be collected and stored in your LOS system such as Lending Pad or Arive. We also match your LOS system to the final figures in the lender portal to ensure data quality.
The time it takes to process a mortgage can vary significantly based on several factors, including the type of mortgage, the lender's efficiency, and the completeness of the borrower's application. Typically, processing a mortgage can take anywhere from a few weeks to a couple of months. Ensuring all documents are accurate and submitted on time can help speed up the process.
When a mortgage is being processed, it means that the loan application and all accompanying documents are being reviewed by the mortgage processor. The processor's job is to compile the data, verify its accuracy, and prepare it for the underwriter. This stage is critical as it directly influences the underwriting decision and, ultimately, the loan approval.
The primary parties involved in mortgage contract processing include:
Does the Underwriter Approve or Deny a Mortgage?
Yes, the underwriter is the key decision-maker in the process of mortgage lending. Based on the information provided by the processor and any additional reviews (such as the property appraisal), the underwriter will approve or deny the mortgage. They assess risk and ensure that the loan complies with all applicable laws and lender guidelines.
The final stage of a mortgage application is the closing process. After the loan is approved by the underwriter, the closing involves finalizing the terms of the loan agreement, signing all necessary documents, and processing the transfer of funds. This is the point at which the borrower completes the loan process and officially takes on the responsibility of the mortgage.
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Contract processors are crucial yet often overlooked in the mortgage industry, handling the organization and formatting of borrower paperwork to enable quick underwriting decisions. Partnering with a contract processing company, like Willow Processing, can accelerate loan processing and help you navigate this complex process effectively. Our dedicated team is here to support both borrowers and loan officers throughout every step, from application to closing. Feel free to reach out for more information—we look forward to assisting you!