The Complete Loan Processor's Handbook
SECTION I: GETTING STARTED
1. What is a Loan Processor?
Defines the position of Loan Processor and the many responsibilities of Loan Processors in reviewing loan files, qualifying loan customers, submitting mortgage loans, and orchestrating the loan closing.
2. Getting Setup for Your First Day:
Tools of the Trade, Using the Financial Calculator, Composition of most Mortgage Branches, Dress for Success. Different Mortgage Loan Product and the Requirements of each, Loan Processor's and Loan Officer's Responsibilities, The Flow of a Loan, Setting up the LP's Workstation, How to Qualify Loan Customers, What Topics to Initially Discuss with the office manager, and Getting Organized.
3. Common Mortgage Lending Terms:
Over 90 commonly used Terms in the Mortgage Lending Business. Definitions and examples that demonstrate the proper use of those terms.
SECTION II: LOAN QUALIFYING
4. Characteristics of Borrowers:
Loan Processing Steps that the Loan Processors complete in properly reviewing a mortgage loan file. What Conforming Lenders look for when Underwriting and Qualifying submitted loan files. Reviews the Document Needs based on loan customer's Credit, Income, and Collateral of the subject property. Locking the Rate, and Satisfying Prior-To-Doc and Prior-To-Funding Conditions.
5. Loan Underwriting:
Manual and Automated Underwriting is discussed with emphasis on the distinctive features of Automated Underwriting (Fannie Mae's DU and Freddie Mac's LP). The features of Layers of Risk and Primary and Contributory Risk Factors are fully discussed.
6. Qualifying Documents:
Required loan documents regarding Employment and Income, Cash, Credit, Residence, and Liabilities when reviewing the Loan Application (1003). Loan Verifications are covered and qualifying Self-employed borrowers is fully discussed.
7. Subject Property Concerns:
Those aspects of the subject property that could be a concern and possibly a "loan killer" are presented and what to do when those features of the subject property are discovered.
8. Types of Mortgage Loans:
Types of Loans: Conforming, Non-Conforming, and B/C Sub-prime loans. Loan Transactions: Purchase Loans, Refinance Loans - Rate/Term and Cash-Out, Streamline Refinance loans, 30-year versus 15-year fixed rate loans, Second Mortgages, Home Equity Line-of-Credit. Loan Products: Fixed Rate, Balloons, ARM loans with in-depth discussion on ARM loan terms and qualifying borrowers on ARM loans. Loan Documentation: Full Doc, Alt Doc, Stated Income, No Ratio (NIQ), and Lite Doc. Ways of structuring the loan to avoid Private Mortgage Insurance.
9. Loan Stacking Order:
Definition of what a Loan Stacking Order is and how it is applied in ordering loan files from the Loan Officer to the Loan Processor. An example of a Loan Stacking Order is presented.
SECTION III: THE LOAN FILE
10. Loan File Information Sheet:
What is contained within a Loan File Information Sheet and how Loan Processors can use this form when initially reviewing loan files. An Exhibit of a Loan File Information Sheet is provided.
11. Uniform Residential Loan Application:
All Sections of the current Uniform Residential Loan Application are fully covered regarding What Information is needed for each and Why that Information is Important. What to look for when reviewing each Section of the 1003.
12. The Good Faith Estimate:
All line Items on the Good Faith Estimate are discussed with special emphasis on Interest Adjustment, PMI, and Calculating Reserves for Hazard Insurance and Property Taxes.
13. The Truth-In-Lending Statement:
All Features of the Truth-In-Lending Statement are covered, with emphasis on how to manually calculate the APR of a loan and how to explain it to Loan Officers and loan customers - so they can understand it as well.
14. Loan Disclosures:
A complete Set of Disclosures is presented and the importance of each Loan Disclosure is discussed. Includes Tax Form 4506 and the Privacy Protection Notice.
15. The Purchase And Sales Agreement:
Discusses the various parts this contract and what to look for when reviewing a Completed and Fully Signed Residential Purchase and Sales Agreement.
16. The Transmittial Summary:
All aspects of the 1008 are discussed and how to manually completing this document.
17. Lending Regulations and Laws:
Mortgage Lending Regulations and Laws are listed and discussed - so the Loan Processor knows what is expected and required of the originating Loan Officer, their Loans, and them - to be In Compliance. Included are the Gramm-Leach-Bliley Act and Section 32 of HOEPA. And, Internet References are provided - if further information on Regulations is needed.
SECTION IV: REPORTS
18. The Credit Report:
How to read a customer's Credit Report. What to look for in assessing the customer's Credit Worthiness - as it relates to the targeted lender.
19. The Property Profile:
Important features provided by a Property Profile or MetroScan, on the subject property, is discussed and what to look for when reviewing this report.
20. Lender's The Rate Sheets:
How to properly read a lender's Rate Sheet. What to look for: Rates, Points, Rebates, Fee and Program Adjustments, Rate Lock Periods, and Lender Fees. So Loan Processors can verify that the loan customer does qualify for their loan, based on the initial information within that loan file, and that the Loan Officer has corectly calculated the rebate on their loan.
21. Title Insurance:
Ordering and reading the different sections of the Preliminary Title Report is discussed and what to look for when reviewing these reports.
22. The Appraisal Report:
Discusses the different types of Appraisals. What areas to review on the Appraisal Report and why. Discusses the difference approaches Appraisers use in assessing the value of the subject property.
SECTION V: LOAN PROCESSING
23. Initial Review of the Loan File:
Applying with that have been previously read and learned in initially reviewing a loan file from the originating Loan Officer. How to begin this process, the sequence of this initial loan review, and what to look for during this process. Identifying needed and required loan documentation based on the type of loan and targeted lender. A Supporting Document Needs List is provided to assist Loan Processors in identifying required supporting documents that will need to be requested and/or ordered.
24. Ordering Supporting Documents:
The identifying and ordering needed and required supporting documents for a loan file: Verifications, Researching Creditor Accounts, Gift Letters, the Title Insurance Report, Payoff of outstanding Liens, Appraisal and homeowner's insurance, and Locking the Rate.
25. Reviewing Supporting Documents:
How to review those required and ordered supporting documents based on the type of loan, setup by the originating Loan Officer, and the targeted lender.
26. Submitting Loan Files:
The different ways of submitting loan files: Automated Underwriting: Fannie Mae's Direct Underwriting (DU) and Freddie Mac's Loan Prospector (LP). Reading an example of FNMA's Underwriting Findings Report. Manual Underwriting and how to submit loans using this approach. The importance of and how to prepare a Remarks Page. Compensating Factors and Satisfying Prior-To-Doc (PTD) and Prior-To-Funding (PTF) conditions.
27. The Loan Closing:
The steps involved in preparing loan files for Closing. The HUD-1 Settlement Statement is fully discussed. A HUD-1 is included in Exhibit XV. The Three-Day Right of Recession is discussed and the importance of Loan Officers attending the Closing of their loans. Preparing the closed and funded (or declined) file to be file and stored away. Updating the Loan Processor's and Loan Officers' loan pipelines.
28. Quality Control:
The importance of the Loan Processor applying the many Rules and Regulations, discussed in Chapter 16, in providing Quality Control for mortgage loans originated and processed within the mortgage branch.
29. Putting It All Together:
Summarizes subjects and processes previously discussed and lists the various steps, in the processing of a Loan, into Phases with Sub-steps listed for all Loan Processing Phases (like a flowchart). The Loan Processor cans printout this flowchart and check-off each step that is completed while processing their loans.
Loan Processing Resources:
Lists of available Internet Websites that Loan Processors can access when additional information is needed in researching a loan file, obtaining additional training, and researching and obtaining information on LOS systems.
Index:
A Comprehensive 7-page Index for making it easy for Loan Processors to find the subject matter they need or are researching.
Exhibits
I. Loan File Information Sheet
II. Uniform Residential Loan Application (Current Version)
III. Good Faith Estimate
IV. Private Mortgage Insurance Schedule
V. Truth-In-Lending Statement
VI. Loan Disclosures
VII. The Transmittal Summary
VIII. Property Profile
IX. Lender's Rate Sheets
X. Appraisal Report
XI. Customer Welcome Letter
XII. Verifications (VOE, VOR, and VOD)
XIII. Self-Employed Analysis Form: Adj. Gross Income Method
XIV. Self-Employed Analysis Form: Schedule Analysis Method
XV. FNMA Desktop Underwriter Findings Report
XVI. HUD-1 Settlement Statement
