What Third Party Service Does the Underwriter Rely on to Secure a Mortgage Loan?
November 2, 2021 - 5 min read
This Article Is About Third-Party Mortgage Processing Used By Mortgage Lenders
Using Third-Party Mortgage Processing can be a great benefit for mortgage companies during times of high volume and capacity. Most lenders have in-house mortgage processing. However, there are times when lenders are busier than normal. The mortgage process is a true process. You cannot speed up the mortgage process. A mortgage processor can only do so much in a day.
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Timeline To Process Loan During The Mortgage Process
A processor cannot be rushed and they will be prone to making mistakes. A mistake made by a processor can mean getting the file kicked back by the mortgage underwriter. It could also mean delays in getting conditional loan approval. It can also mean getting way more conditions than usual because the file was not properly prepared by the processor prior to submission to underwriting. A poorly processed file is one of the main reasons for delays in getting a clear to close which means delays in the home closing.
The Duties Of The Mortgage Processor During The Initial Stages Of The Mortgage Loan Process
The mortgage processor is the quarterback of the overall mortgage process. The processor oversees every borrower from the time the pre-approval letter is issued to the closing. We will cover the role of a mortgage processor and their duties and why third-party mortgage processing can be a Godsend to many lenders during times of high capacity in mortgage loan applications. In this article, we will discuss and cover Third-Party Mortgage Processing Used By Mortgage Lenders and its benefits and setbacks.
The Role Of A Mortgage Processor
The loan officer will take the initial mortgage loan application (1003) from mortgage loan applicants and qualified borrowers. After running credit, reviewing the borrower’s documents, and getting an automated approval per AUS, the loan officer will issue a pre-approval letter so the borrower can shop for a home. Once the borrower enters into a home purchase contract, a mortgage processor is assigned to the borrower’s file. The assigned mortgage processor will work on the borrower’s file from the moment they are assigned until their home loan has been closed and funded.
The Importance Role Of The Mortgage Processor
The processor is the most important mortgage professional in the mortgage process. The processor is the quarterback for the borrower’s file and is the middle person between the loan officer, the underwriter, the closing department, buyers, sellers, attorneys, title companies, and third-party vendors.
Experienced Mortgage Processors Key In Stressfree Mortgage Process And On Time Closings
Experienced veteran mortgage processors will be experts in making the mortgage process run smoothly with little to no stress. Experienced loan processors take great pride in getting conditional loan approvals with little conditions and making every closing date. However, there is a limit on the number of loans each processor can have in their pipeline and close every month.
Mortgage Processors Is Responsible For Smooth Mortgage Process For Meeting Closing Dates
Due to the booming mortgage market in 2021 and forecast in 2022, many mortgage companies were flooded with more mortgage loan applications than they could handle. At most mortgage companies, home purchase loans took at least 60 days to close. Refinance transactions took 90 to 120 days from application to closing. Historic low mortgage rates and the booming housing market bombarded mortgage companies with new mortgage loan applications where many lenders stopped taking new loan applications until further notice.
Outsourcing Processing To Third Party Processors
Most mortgage companies have in-house mortgage processors. However, there are times when mortgage companies are busier than normal. When a mortgage brokerage company is busier than usual, it takes time for in-house processors to process a file. There are delays in submitting a file to a wholesale lender and/or investor.
Delays In The Mortgage Process And Closing Dates
There are instances where a new mortgage loan application can sit on top of the processor’s desk for a week or two and not even be submitted due to overcapacity in new loan applications. Outsourcing mortgage processing for mortgage brokers can have great advantages and benefits during times when there is an abundance of new mortgage loan applications.
Benefits Of Using Third-Party Mortgage Processing
If you use a third-party mortgage processing company it will give you outside help without having to hire and train other new team members. You can use them all year or only during your busy time of the year. It’s up to you as a mortgage broker to use third-party contract processors and use your in-house processors as loan officer assistants during times of high volume and capacity.
Using Third-Party Mortgage Processing Companies Versus Having In-House Processors
Using third-party mortgage processing companies will free up your time so that you can work on how to obtain business, take applications, talk on the phone, focus on your relationships with the borrowers, and anything else that makes you money. However, you cant assume that the contract mortgage processor does the transaction as you do. They might not have the customer service level that you have. They also may not be able to handle your type of clientele. Third-Party mortgage processors can be expensive. AND you might be charged other fees depending on what type of a loan it is.
They are not your employees therefore you cannot prioritize their workload. However, most third-party mortgage processors are experienced seasoned professionals who work hard and know what they are doing.
Scope Of Work Of Third-Party Mortgage Processing
Third-Party Processors are also called TPPs. Third-Party Processors can be used usually on all mortgage loan products. Third-Party Processors can work on Conventional, FHA, VA, USDA, and High Balance Loans. However, it’s up to the specific wholesale lender if they allow TPP or not. TTP is not affiliated with the Mortgage Broker of Record in any way.
Rules, Regulations, Guidelines In Using Third-Party Processors
The TPP fee is not included in the QM points and fees test. Third-Party Processing fees and costs will not be considered Broker Compensation if the below is accurate:
- Not affiliated with the Mortgage Broker
- Licensed with the NMLS in the state that the subject property is in
- The Mortgage Processor is an employee of a Licensed Mortgage Processing Company and has their own NMLS number
- The third-party processing fee can not be paid to the Mortgage Broker or the Wholesale Lender
- The third-party mortgage processing company and its fees must be fully disclosed
Third-Party Processors Do Not Get Paid Unless The Loan Closes
Third-party mortgage processors can be a Godsend when mortgage companies are at full capacity and their in-house processors cannot handle the workload. Third-Party Processors do not get paid until the mortgage loan has been closed and funded. This is why most third-party processors will go above and beyond to make sure the file is complete, legible, and has no missing documents prior to submitting to underwriting.
Speed Of Third-Party Processors Versus In-House Mortgage Processors
When the mortgage underwriter issues the conditional loan approval, the TPP will not waste any time in gathering the conditions so they can prepare to submit the file for a clear to close. The sooner the borrower closes on their home loan, the sooner the contract processing company gets paid. Capital Lending Network, Inc. has been using Third-Party Mortgage Processing for the past 10 years.
Working as a Contract Processor for 3Rd Party Contract Processing Company
Contract processors has benefits like medical insurance and other benefits. They gettting compensated at least 50% of the processing fee with some bonuses if they close more than 10 files per month. With 15 files per month they are making easy 130,000+ per year. If you want to work as a contract processor please fill the form below and we will contact you as soon as we can.
Gina Palacious
Haven’t found a home yet trying for a pre approval. My score is low for now. I opened some new credit for an improved score in a month or two
Heather LaPuenzca
I currently owner-occupy a fourplex in St. Louis, MO. I have been following Alex Carlucci’s videos on YouTube and Gustan Cho Associates.
I am considering moving out and owner-occupying another duplex or fourplex.
I am wondering what terms I can get prequalified for. I research Capital Lending Network and Gustan Cho Associates is all over the internet. I also saw YouTube videos from Alex Carlucci of Gustan Cho Associates
George Marckanoz
I am interested in applying for a Non-Qualified Mortgage. I am a big fan of Gustan Cho Associates and have been following the blogs on Gustan Cho Associates for almost wo years. My small business loss on my tax returns drastically reduces the annual income earned from my employer, $75K.
In addition, I will be signing on 2 tenants for rental income for the property in the basement apartment. I am trying to get approved for more home, i.e $600K. I can obtain an 18mos rental agreement and 1st month’s rent from my future tenants if needed. I am also interested in knowing if down payment assistance is available, the same I qualified for with a FHA loan. I live in zip code 80017 in Aurora, Colorado and I am trying to purchase a home in zip code 80132, Monument, CO.
LOCK DESK AND SECONDARY MARKET DIVISION
Lock Desk Reminder There will be no published rates and locking will be unavailable on Wednesday November 11, 2020 at Capital Lending Network, Inc. due to Veterans Day. Lock desk will be open to process any other requests. However, our retail team at Capital Lending Network and Gustan Cho Associates will be open and business as usual.
Michael Fitzgerald
Third party mortgage processing services is great. But right now it is impossible to get a third-party processing company because its so busy
William Edwards
My wife has a high score and I have only a 603 with old collections. We would like to buy, but Veterans United wants us to pay off those old collections and I dont want to.
Any way to get a loan in those conditions?
Thank you for your time.
Elizabeth Johnson
I have been renting a home for $725/month for the past 4 years, but landlord is selling now for $129,900. My credit score is 540, but I can put down 10% (proceeds from pension loan). I was waiting for tax refunds and stimulus to fix credit, but landlord cannot wait. My salary is $52K. Please advise if I can qualify for an FHA mortgage.
Mildred Salter
I’m working on my credit score now and I just needed to know what I need to get ready for home ownership.
Bruce and Tina Zeldik
do you service mortgages in North Carolina. My credit is about 700 but my debt to income ratio is about 48% – do you think you could help me?
Seth Harper
I am trying to see if I can qualify for this Property out in Tennessee. I was also wonder if I could have another person on the mortgage as well. I served over seas with a buddy of mine and we have a plan for a place we can build on but also ha e a house already on it so we can work the land.
Melissa Walker
Good Morning;
Currently, I’m in a Chapter 13 and want to buy a home with a VA Loan. I saw a video and you explain that if I have money in savings account that possibility exist that the trustee will required for me to surrender such savings. chapt 13 is for 5 years, Jan 2017 to Jan 2022, don’t have any debt or delay payments in my chap13 what you recommend. Currently I’m in the process of preapproval but if my savings are compromised I rather wait until is discharge!
Edward Smith
My husband and I are in a chapter 13 bankruptcy. We are going to have 12 months of payment to the trustee by December 2020. We have never been late on our payments to the trustee. We would like to qualify for a first time home purchase. We are currently living in San Diego, California, but we are looking to relocate to Georgia (near Atlanta). Our FICO scores right now are just above 600. We have about $50,000 in assets (Bank, 401K, IRA, etc. ). We hope you can help us.
Rodney Morgan
I have a VA Home and want to sale and purchase newer home using VA Home Loan. My credit is fair-good. within the past 12 months, I had a late payment back in May 2020 on my mortgage, I am now current. I have one late payment on a vehicle for September 2020, I am now current.
Amber White
I am wanting to do an FHA refinance. I have a large escrow shortage so cannot do the streamline. I’m working w another lender but frustrated. I have an appraisal already. Does that transfer? How quickly can you close me and how much is origination costs? My five was 618 when pulled for this transaction. What’s the interest rate as well? Thanks Amber
Mary Anne Clarke
My spouse and I are both self employed… I am a realtor and he is a truck driver… I see that you offer bank statement loans… combined we bring in well over $500k a year. I have a BK ( a couple; due to Illinois red light cameras, won my suit but doesn’t remove the BK’s) the last one is over 2 years old. My husband doesn’t have a BK on his credit file. I can Have our CPA pull over financials for the last 12 months.
Based on this are we able to try to secure the bank statement loan. We rent because we figured we could never get approved, we write off a lot to remove some of the tax liability. Currently we pay $2500 a month in rent. The property we found that we like is in budget; based on the mortgage calculator I used. ( I am a realtor ) Can you all assist? Our lease is upon Aug, we are working on our scores now. We can pay the 20% down – we have enough in our savings
Tammy Black
We are just about 1 year into a Chapter 13 plan (December 31) and are looking at the possibility of relocating and purchasing a home. We have the funds for a down payment that had been disclosed to the Trustee when filing (401K/Mutual Funds). We have seasoned funds for 6 months of mortgage payment reserves. We would be looking at the same payment as our rent is now, or less. We’re looking to purchase and move as soon as the COVID-19 crisis passes, so we have some time, but want to be prepared to put an offer on a house and gain Trustee approval, etc. I’ve run my credit from freecreditreport.com and it is currently 609. I’ve spoken to a bank that originates loans for people in Chapter 13 and they said that my credit score had to be 640 or above to meet their standards. Then we ran across your firms’ info online and watched a video on what’s needed for a successful Chapter 13 home purchase. We should be good on most all “checkboxes”. I’ve already spoken to my bankruptcy attorney and they think that we can apply for Trustee approval. Any help would be greatly appreciated.
Tammy Johnson
Hi! My husband is getting out of the marine corps in January and i am retired navy. We are looking to purchase our first home at that time in clyde Ohio. Neither of us have stellar credit scores and are concerned about our odds of approval for a va loan.
Kimberly Campbell
I recently applied for a home loan for a new home and I was denied because of late payments reported to Experian for my family’s time share property. I was not aware of the derogatory status of my credit report prior to applying for the home loan. I use credit karma and a credit watch service from my bank to track my credit status and unfortunately these late fees did not show up on those reports. After reviewing the account from the time share I discovered error. There were a few missed payments in late 2019 and when we resumed the payments we selected current payment on the online platform we didn’t see there was a past due amount we simply selected current payment for each month. If you were to look at the account payments were being made for several months but because of the past due amount was not be covered the account showed series of late payments. I reached out to the the time share company to see if they could assist with removing some of the late fees but I was not successful. The only were willing change the status of the account from derogatory to current.
We currently own a home and we don’t have any late fees in the past 12 months and just one in the last 24 months I don’t know if this would help. My credit score with the other two credit bureaus is over 715. I am not sure if your company can assist us in securing a loan but I would appreciate any advice that you could give us. Thank you for your consideration.