What is a mortgage loan processor?

Mortgage loan processors have an important role in the mortgage process. Not only do they keep everything in order for underwriting, but they also ensure borrowers’ applications are on course for closing.

But what exactly is a mortgage loan processor? What are the key tasks that loan processors do? And how do you become one?

In this article, we will answer these questions and more. Here is everything you need to know about a mortgage loan processor.  

What is a mortgage loan processor?

A mortgage loan processor assembles, administers, and processes home loan application paperwork before it is approved by the loan underwriter. As a mortgage loan processor, you play a crucial role in getting mortgage loan requests to the final close.

Mortgage loan processors—who are also called loan originators or loan processors—prepare documents for the loan program a borrower wants to use. In other words, mortgage loan processors guide prospective home buyers through the first step of the loan process. After the paperwork is complete, the mortgage loan processor gives the loan files to the underwriter.

A mortgage loan processor’s key tasks

Mortgage loan processors streamline the process of applying for a home loan. Because the steps can be complex, mortgage loan processors help borrowers find the right home loan for their budget and financial goals.

Here are the key tasks common to mortgage loan processors:

• Gather financial documents
• Analyze credit reports
• Verify application information
• Order appraisals and title work
• Track deadlines
• Collaborate with loan underwriters

Let’s take a closer look at each of the common tasks of a mortgage loan processor:

Gather financial documents

One of the most important duties of a mortgage loan processor is gathering financial documents from borrowers and ensuring they are in order. This step in the process includes confirmation that the documents are correct and accurate before being handed over to the mortgage underwriter. These documents usually include:

• Tax returns
• W-2s
• Gross monthly income
• Proof of insurance
• Bank statements
• Evidence of assets and debts

Analyze credit reports

A mortgage loan processor orders and examines a borrower’s credit report to check for collections, late payments, and inaccuracies. The loan processor then collects letters of explanation from the borrower to gain a better understanding.

Remember: a borrower’s chances of getting approved for a home loan are higher if they have a good credit score. The mortgage loan processor’s job is to see how borrowers have handled paying bills in the past and confirm they will be capable of making mortgage payments in the future.

Verify application information

Occasionally, underwriters require written verification of employment or the borrower’s bank accounts. In this instance, the mortgage loan processor would submit a form to the borrower’s employer or lending institution to fill out. If it is an online mortgage, loan processors can give the lender permission to request the information electronically.

Home loans that are backed by the Federal Housing Administration (FHA), the US Department of Veterans Affairs (VA), or the US Department of Agriculture (USDA) can require special documents a mortgage loan processor may request.

Order appraisals and title work

Mortgage loan processors work with an escrow or title company to gather information about the home the borrower is purchasing, ensuring it is free of any ownership claims.

If a home appraisal is required, the mortgage loan processor collects a fee from the borrower to pay for it and promptly schedules it with an appraisal company.

Track deadlines

Mortgage loan processors also keep track of important deadlines throughout the mortgage loan application process. This ensures borrowers close their properties on time and avoid unnecessary fees.  This general timeline includes the following:

• Making an offer
• Home appraisal
• Completing the mortgage underwriting
• Final loan

Collaborate with loan underwriters

Finally, mortgage loan processors work directly with underwriters to finalize the mortgage application process. Loan processors help transition all the loan documentation to the mortgage underwriter for final approval.

Is it hard to be a mortgage loan processor?

No. It is not hard to be a mortgage loan processor. It can, however, be stressful at times. While you must have certain skills, working as a mortgage loan processor does not require formal educational training.

For mortgage loan processors, every workday is different. There is also a lot of paperwork involved, which is especially true when you have to carry out verifications.

In addition to varied work weeks and paperwork, mortgage loan processors must also have communication abilities and people skills. On an average day, a mortgage loan processor will have conversations with loan officers, underwriters, and borrowers. For this reason, you will excel in the role if you have an outgoing personality.

It also helps if you can work in a fast-paced environment. The job of mortgage loan processor would be difficult for someone who is unable to multitask and think on their toes. As a mortgage loan processor, you will likely have to rearrange your schedule and prioritize things on the fly.

What is the difference between a mortgage loan processor and a loan officer?

A mortgage loan processor works for a financial institution or a bank and reviews mortgage loan applications before submitting them to underwriters for final review. Loan processors play a key role in guiding a borrowers’ loans to completion.

A mortgage loan officer, on the other hand, works for a mortgage lender, a bank, or a credit union, offering programs and mortgage rates from their financial institution. If you’re curious, find out how to become a mortgage loan officer in ten steps.

Mortgage loan officers help borrowers access the most affordable mortgage loan rates at their institution and may receive a commission for processing a client’s home loan application. If you’re interested to know how much they make, read our story on mortgage loan officer salaries.

This graph outlines the key differences between a mortgage loan processor and a loan officer:

Know the difference between loan processors vs underwriters here.

How to become a mortgage loan processor?

To become a mortgage loan processor, it is important that you develop diversified skills that work well in the financial industry. To set yourself up to be a more appealing hire, you will want to gain as much experience as possible through online financial courses and on-the-job training sessions.

Here are some of the basic steps to becoming a mortgage loan processor:

1. Complete high school education. For many loan companies, a high school education is a minimum requirement.
    
2. Earn higher-level degree. After earning your high school diploma, you should then strive to earn a higher-level degree in a related field, such as business, finance, or banking. This will provide you with the essential concepts of banking practices and financial management.
    
3. Get your mortgage license. The next step is to complete the National Association of Mortgage Processors (NAMP) online test to earn your mortgage license.
    
4. Find employment. Mortgage loan processors work at mortgage lenders, banks, and credit unions. From there, you can get on-the-job training. Other skills you can l earn on the job include information processing, computer software, and communications.
    
5. Climb the ladder. You will find it easier to advance in financial positions the longer you stay in the field.

If you're truly interested in becoming a mortgage loan officer, take the time to look at the mortgage professionals we highlight in our Best of Mortgage section. Here you will find the top performing mortgage professionals, including mortgage loan processors, across the USA.

Have experience in becoming a mortgage loan processor? Let us know in the comment section below.