The mortgage world is changing. The recent credit crunch has made put a lot of lenders and mortgage brokers out of business. The ones still in business today have to work smarter and keep their costs low.
There is a significant amount of paperwork to be coordinated throughout the mortgage process. Dozens of people and companies are involved in the process and 100s of documents are ordered, tracked and quality controlled to make sure the loan can be approved. Coordinating everything is the job of a mortgage loan processor. Some loan officers have a person on staff which is a significant expense. Some loan officers use contract loan processing to help keep their costs lower. While contract loan processing has been around a long time, many more are beginning to use it to remain competitive.
* So how does contract loan processing affect someone who is looking for a new mortgage?
* Is it good or bad if your loan officer or mortgage broker uses a contract processor for their loan processing?
Doing business with a loan officer who uses contract loan processing is not much different than doing business with one who uses a staff processor. In fact, since contract loan processing is a lower, variable expense for the mortgage broker you may be able to get better loan terms. It is important to ask a lot of questions and understand who you are working with but your primary focus when selecting a mortgage professional should be the rate, closing costs, loan terms and customer service they promises to deliver. Your service level may be higher with contract loan processing too. A contract loan processing company has to close loans faster with better customer service since they rely on great service to earn more business from their loan officer clients.
One thing to consider asking is if the loan officer does their own loan processing without using a staff processor or contract loan processing service. This is a warning sign that the loan officer may only be part time or just doesn’t do many loans. My experience shows that you will often not get the best rate and terms if a loan officer is only doing a 1-2 loans per month because they are under pressure to make their living on fewer loans. Also having a lot of experience underwriting mortgages from loan officers who process on their own loans, the quality of processing is often lower. This creates more last minute complications and delays in underwriting. A loan officer backed by a staff processor or contract loan processing service is good indicator of success and professionalism.
Knowing if your loan officer uses contract loan processing is good for due diligence but in the end a contract loan processing company can be a key ingredient to your mortgage going smoothly.
