Mortgage Underwriting Work : What Does it Entail

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A home is a precious property. It takes some people up to thirty years to pay off their mortgage loan and own a home. If you are employed, and have constant income, you can own a home through a home loan as well. The process starts with the submission of a mortgage application form. After your application is received by the lender, you are asked to submit documents that would help the loan officers pre-approve your application. If your application file is pre-approved it is automatically forwarded to the mortgage underwriting department. In this department there are detectives called underwriters.

Their role is to investigate the truth about a loan applicant on behalf of the lender. Without the underwriter’s help, a lender could overlook some issues about a home buyer and regret later. Underwriters are gatekeepers and they will not let you get in unless you are totally creditworthy. The mortgage underwriting experts evaluate your pre-approved file again to detect false information or misleading statements. They cannot approve a file that seems suspicious. Their main focus is your financial information. They want to verify your means of earning income, your sources of the down payment and if you have residue income in the bank. Mortgage underwriting work is very sensitive and difficult.

It entails certain computations such as debt to income ratio. This one seeks to know how much you owe others and whether you can still pay your house loan and your creditors with your income every month. Mortgage underwriting standards are sterner now than they were in the beginning of twenty-first century. Back then there were home buyers who bought home loans without demonstrating their ability to repay them. This explains why many foreclosures were done by banks in the recent past. If you want to buy a dwelling now, you must be ready to face very strict and tough mortgage underwriting principles.

So it will quite difficult to qualify for a house loan now if you cannot afford it. Additionally, if your credit score is very poor, you might miss a chance to buy a property. To ascertain your credit score, a mortgage underwriting team will check your FIC (Fair Isaac Corporation) credit score with the three main credit bureaus: TransUnion, Experian and Equifax. The team looks for red flags on your report. These can include bankruptcy, debt collections, foreclosure and so on. When even a single red flag is noted, the underwriters ask for a letter of explanation. If you give valid answers, they will consider other factors such as the nature of your current and past employment records.

They may also ask you to pay a larger down payment than applicants who have high credit scores. Another important demand from lenders concerns your monthly income and debt obligations. Your debt should not be more than thirty-six percent of your monthly salary. Mortgage underwriting department also reviews a home buyer’s property appraisal. It does this to make sure that the value of the property you want aligns with the mortgage size you want to buy. They seriously consider factors such as the location, natural disaster vulnerability, and other risks.

Mortgage Outsourcing helps many companies cut costs. There are many Contract Mortgage Processor Services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.

Mortgage Outsourcing Companies Play Many Roles To Save Time

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Outsourcing is a business strategy for cutting back overall expenses. It is common among mortgage loan providers like banks. They assign their work to mortgage outsourcing companies. These organizations are now increasingly popular in the US. They have remote offices that are fully equipped with modern tools of loan processing and numerous human resources. They also operate under their terms and conditions. In short, mortgage outsourcing companies are independent. They use contract documents to form legal agreements with their customers.

There are many roles played by third-party, self-governing mortgage processors. The first role is home loan pre-approval. This is the loan origination process. The lender creates a product for the borrower based on their tastes and preferences. They sell fixed-rate mortgages, Adjustable-Rate Mortgages (ARMs) and hybrid mortgages. The latter begins as a fixed-rate product and is later changed into an ARM. To determine the best product for a prospective home buyer, mortgage outsourcing companies require a number of documents.

A buyer, therefore, must provide their credit card statements, bank statements, tax returns, pay slips, name of their employer, credit score reports and copies of their personal identification among others. Mortgage outsourcing companies are more reliable as far as pre-approval stage goes. First they have many loan officers who are knowledgeable and experienced in pre-approving home loans. Second the big number of officers can finish the task the same day and probably enter the second stage.

This stage is called mortgage underwriting. It is the most sensitive and tricky tasks in loan processing. Mortgage outsourcing companies are more important in the underwriting phase. Because underwriters are highly paid, many small-scale banks and sacco societies are unable to employ them. However, third-party companies have many underwriters than your small mortgage company can afford. These professionals play a vital role: determining a home buyer’s ability to pay off their loan. They do so by computing debt to income ratio.

It compares the amount of debt owed versus the amount of monthly income. An underwriter cannot approve a file if the applicant’s income is less than the debt owed. This is clear evidence that they cannot afford the home loan they are applying for. When an underwriter needs more information, they return a file to the pre-approval stage. Underwriters are also given the responsibility of supervising the property appraisal process to ensure that the price stated by a loan applicant is not exaggerated. Eventually they can deny, approve or suspend a loan file. Mortgage outsourcing companies are also assigned the last stage of processing.

This final or closing stage has its challenges. If you allow Mortgage outsourcing companies help you, you will close many files very quickly. These firms have hundreds of title abstractors who will conduct a title search process very swiftly. These abstractors are familiar with the US laws on property titles. Therefore they are able to promptly detect fraud and signature forgery on the title deed. They trace the title chain, which is lengthened each time the property is resold. They also oversee purchase of the lender’s title insurance and other related documents.

Mortgage Outsourcing helps many companies cut costs. There are many Contract Mortgage Processor Services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.

How You Will Benefit From A Contract Underwriting Company

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To help as many prospective homeowners gain entry into the US real estate market, you can use a contract underwriting company. This is usually a huge firm that provides mortgage processing services. It can be hired on either a short-term or long-term basis depending upon your business needs. Additionally, you should know that this company operates under the concept of outsourcing. It does not require you to expand your office space or procure more equipment. A contract underwriting company is completely independent. It only demands a service fee from the customer. To ensure great results, you should communicate effectively with the outsourced contractor. This is because many third party underwriting firms do not want to directly deal with your customers. They make you the middleman between the customer and them.

Even so they take away your mental burden and free your time so you could concentrate on marketing your organization. One advantage to using a contract underwriting company is that you will be exposed to a pool of qualified underwriters. They will be more productive than the team you have in the office. Unlike your small bank or sacco that has just the employees it can afford, a huge contract underwriting company has either hundreds or thousands of staff. Its employees are scattered across the country. That’s because many companies have subsidiaries to ensure you get served by a professional who is near you. Because many underwriters are made available to serve the customer, you can get as many home loan applicants as possible. During economic crisis and inflation, home buyers are fewer than they are when the economy is good.

A contract underwriting company will be affected by the bad economic situation as much as your small company will. So to stay afloat itself, and to help you survive the inflation, this company will continue to share its resources with you. This way you can avoid using in-house employees who may demand a pay rise to meet the rising cost of living. Even if your in-house underwriters do not demand a pay rise; they will continue to enjoy other perks at your small company’s expense. On the other hand, a contract underwriting company will not receive any perks from your business. It will not demand a paid leave, workmen’s compensation, health insurance and a working environment that goes beyond OSHA standards. It will only demand its service fee per contract it has with you.

In the long run the company will help you reduce up to fifty percent your normal office expenditures. It will free your time and help you save all the money that is paid in salaries, bonuses, employee training and so on. What’s more, the outsourced underwriter will let you use its underwriting software and give you many employees who know how to use the software. Because of this you will avoid buying expensive modern software and the cost of training your underwriter on how to use it. Any task that your internal employees finish in almost five days will be completed within 24 to 48 hours by the contract underwriting company. So far you have realized the importance of using an outsourced firm rather than one or more full-time underwriters.

Mortgage Loan Processors helps mortgage brokers and bankers cut costs. There are many Outsourced mortgage loan processing services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure success.

Three Main Areas Of Mortgage Underwriting Services

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Does your small company provide home loans? Do you need eligible and competent mortgage underwriters? Now there is a very simple way of finding highly competent and experienced staff without advertising vacant positions in your company. It is none other than outsourcing. Through outsourcing you can buy any amount of mortgage underwriting services demanded by your company. There are big mortgage processing companies in the US that can sell you high quality services for affordable rates. They will have a contract that stipulates their terms of service. Your obligation is to sign this contract only if it is favorable. Mortgage underwriting services entail four main areas of delivery. Three areas are described briefly as shown below.

Income and Debt analysis – Underwriters call this capacity in short. It entails a thorough and clever analysis of a loan applicant’s total income to their projected mortgage size. There are two types of ratios that must be computed to compare a borrower’s income to their debt size. The first one is called the housing ratio or front-end-ratio. It takes into consideration many factors including principle, interest and homeowners insurance. When applicable, providers of mortgage underwriting services could consider mortgage insurance and natural disaster insurance as well.

The housing ratio is the percentage of proposed mortgage divided by monthly income before taxation. The required result should be twenty-eight percent or less for approval to be granted. Even so, the back-end-ratio is also considered before approval of loan file is given. Sellers of mortgage underwriting services add the front-end-ratio to any recurring debt obligations that a loan applicant has. Their credit report will show recurring debt obligations. These could be car loans, credit card debts, and so on. This ratio does not include the small debts a home buyer causes every day. The best result for back-end-ratio computation is usually forty percent or less. Even so, there are some lenders who approve a home loan when the back-end-ratio is more than forty percent. In short, underwriters, on behalf of lenders, tackle debt cases in a very unique and intelligent manner.

Prediction of Future income – Vendors of mortgage underwriting services call this credit prediction. Underwriters perform statistics to determine a borrower’s future loan repayment likelihood. To be accurate, these experts review past financial history. Many factors are considered including payment history, total home loan debt vs. outstanding installment debt and so on. After their evaluation is over, each loan applicant’s file is given a credit score. A higher credit score means a lower risk to the lender and vice versa. If a loan applicant gets a high credit score they get favorable loan terms as well.

Cash Review - This is also part of mortgage underwriting services. It is one of the four C’S of the underwriting process. It is called cash in short. The main work done here is the review of the asset being mortgaged after the home buyer has taken possession of it. There are two main aspects of cash. These are cash in reserves and cash in the deal. Cash in reserves is the amount that a home buyer has after their file is closed. The higher the amount a borrower has in reserve the lower their chances of defaulting. Cash in the deal refers to the down payment. If a home buyer wants to make a huge down payment, it means they are not afraid of putting their money at risk. So they get loan terms from the outsourced dealer of mortgage underwriting services.

Mortgage Loan Processors helps mortgage brokers and bankers cut costs. There are many Outsourced mortgage loan processing services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure success.

Mortgage Outsourcing Industry Is Perfect Strategy For Processing Loans

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The biggest investment one can do in life is home buying. Because banks and other housing corporations understand this fact, they develop very unique loan products to attract applicants. Some of them are able to get a lot of applicants on a daily basis. And because of this another industry has crop up called mortgage outsourcing. This new industry has seen a mega money-making opportunity among mortgage providers. They have a practical strategy for assisting home loans providers.

Their idea is to speed up loan origination processes to help their client close many files per day. Mortgage outsourcing companies follow the same procedure you do in your organization. They are governed by the same laws that govern the US housing industry. In addition, they are registered businesses and so they can be sued in case of fraud. As a result, you do not have a reason to doubt them. They can be hired on a contract basis. So they are not employed full-time like your in-house loan processors. What’s more, you could enter into long-term or short-term contracts with them depending on your goals.

Mortgage outsourcing firms will be beside you in the times of economic recession or economic boom. They will not revoke their service delivery just because your orders have reduced. In any case you retain the freedom to open or not to open a new contract with them. This, however, is not the case with in-house employees. Rather than being independent, they depend fully on your company. They use your resources and demand their salaries despite their absence or laziness. With a mortgage outsourcing arrangement you will always get value for your money.

As soon as you find an outworker that has served other people successfully, you can let go of expensive staff. There will no longer be labor laws forcing you to pay for high and low productivity. Those who will accept to perform your home loan processing work will manage their employee affairs. They will only demand their service fees from you. If particular work needs to be repeated they will not demand extra pay. Prior to buying mortgage outsourcing services, there is something you must do.

This entails making a decision about the stage of loan origination you want to farm out first. It is definitely wiser and cheaper to delegate the entire process than to retain your office staff. If you find a reliable mortgage outsourcing company, even the most difficult stages will no longer bother you. Big companies can close many more files within 24 hours. This is because they work around the clock and have many workers than you do. The first stage is usually very lengthy and difficult.

Loan applications for different types of home loans have to be sorted first. Then loan applicants are contacted so they can submit certain documents. This stage can be simplified through proper coordination between you and the chosen outworker. The underwriting stage is also difficult and sensitive. So you need a big mortgage outsourcing company to lend you a hand. It is better than you because it owns modern software for underwriting. It has many competent underwriters as well. This company can process loans quickly and put them in the closing stage. It entails title search, property evaluation and purchase of title insurance for the lender.

Mortgage Outsourcing helps many companies cut costs. There are many Contract Mortgage Processor Services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.

Contract Mortgage Processors: How Can They Support Your Small Business?

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Do you desperately wish you could process home loans quickly? Speed and accuracy are very crucial to those who work in the US housing industry. The industry has many rivals and if you sleep on the job you will be out of business soon. Like many of your competitors are doing, choose contract mortgage processing today. This is a suitable way to take advantage of economies of scale. Rather than depend on a few loan processors in your office, you could easily farm out new loan applications. Third party home loan processors are established companies with numerous workers.

They could complete a task that you normally finish in three days in 24 hours. Time is very necessary in the mortgage industry. When you embrace contract mortgage processing, you will free your time. This is so because another company will take over your responsibilities. With extra time on your side you could create a robust marketing campaign to promote your business. Having more home loan applicants will no longer bother you as the contract mortgage processors will help. They will stand by you even when contracts are hard to find. During economic crisis many people avoid buying home loans.

As a result, banks pay their loan processors their salaries for doing very little. However, those banks that have discovered about contract mortgage processing do not deal with employees salaries when business is bad. They simply outsource every contract that they snatch during the dry period. This allows them to focus more on finding customers than on originating loans. If you have not tried outsourcing, you are missing a lot of benefits. It is necessary that you let providers of contract mortgage processing services assist you. There is nothing to lose if you do so. This is because outside processors have their offices and resources. They will not come in your office to work there. Second they do not have to directly deal with your customer. You can be the middleman if you do not want the contract mortgage processing companies to tamper with your customer relationships. They will ask you to obtain given documents from the customers.

You will obtain the documents and send them to your contractors. The working arrangement will be that easy. To work with contract mortgage processing companies, you must sign a contract. It will stipulate the working arrangement between your company and the service provider. This document binds you when you sign it. Thus you want to only sign it if you are fully satisfied with its terms. If you need some terms changed, talk to the contractor to see if they can alter those terms. Mostly you will find the prices you would pay on this agreement document. If you think the prices are too high, you again have a right to bargain. This is possible unless the contractor does not negotiate their price. Leave them alone if they cannot negotiate. There are many other contract mortgage processing firms out there. They can be found on the internet. Ensure that you read testimonials and reviews, though, prior to selecting.

Mortgage Outsourcing helps many companies cut costs. There are many Contract Mortgage Processor Services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.

Vital Roles of Mortgage Processing Companies

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Do you know the work of mortgage processing companies? They help mortgage providers like banks or real estate companies process home loan applications. Renowned and popular home loan sellers receive tons of applicants per day. Without a suitable strategy to help them serve the customers quickly they can experience loss of business. The bank which has already embraced the concept of outsourcing is far ahead. Mortgage processing companies accept to be assigned work by banks and other entities in the housing industry. Their motive is very clear and it is not to beg your customers to apply for a home loan via them instead.

They just want to help you complete your work quickly and accurately. Mortgage processors are professionals who have greatly excelled in their careers. They specialize in different areas. So in a mortgage processing company you will find a big team of loan officers, underwriters, title abstractors, property valuers, realtors, real estate lawyers and so on. If you have a small bank or credit sacco that offers mortgages, you are a suitable candidate for outsourcing. Mortgage processing companies will be pleased to meet you. Instead of relying on your small team in the office, you can either outsource the entire loan origination process or parts of it.

It is up to you to make this choice. Since you have not outsourced previously, the most prudent thing to do is to outsource one or more steps of home loan processing. You could farm out the most difficult task. As well, you can delegate the stage that you struggle with because of inadequate staff. Mortgage processing companies will give you either a customized price or a comprehensive price. The customized rate is determined when you have special needs. For instance, if you want to subcontract only a portion of the work you can get a personalized rate.

In addition, if your in-house team is stuck in the middle of loan processing, because of a given problem, the third party will charge you a tailored fee to solve the problem. A comprehensive fee is charged when the entire loan origination work is outsourced. This means that the third party would do all stages on behalf of a company. To some of you this might seem too expensive but it is not. The cost of paying your in-house workers monthly is indeed higher than the cost of using mortgage processing companies throughout the month. These companies do not come to your office. They work remotely with their equipment and human resources.

Because they are big organizations, they may have thousands of workers who tackle different cases of mortgages every day. A big team cannot be compared to the small team of loan processors in your office. It has better problem-solving skills because of vast exposure it gets each day. Also big mortgage processing companies are reliable in terms of quick deliveries and excellent results. They take away your burdens hence allowing you concentrate on finding more real estate investors who need a mortgage loan. More freedom will also help you discover problems that could destroy your organization.

Mortgage Processing helps many companies cut costs. There are many Contract Mortgage Processor Services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.

Key Facts about Mortgage Processing Companies

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Choosing the Right Mortgage

Mortgage processing firms have the expertise to assist their clients in deciding between several loan options and in assisting them to close with a high level of success. Accessing a loan with a variety of lenders can be confusing to many potential borrowers and, at times, individuals and organizations are unaware of where to start and which company is the best to approach. Having a mortgage processor will eliminate the doubt and stress in seeking out a loan.

Benefits of Outsourcing Mortgage Processing

With every function there is the need for the human resources to accomplish the tasks involved. For small businesses it may be financially beneficial to outsource these functions. With regard to mortgage processing, using an external company can allow you to save time and money by reducing your staffing needs, increasing your company's profitability, and ensuring that your loans are in compliance with industry regulations. To get loans closed in today's economic climate there is the need for a mortgage processor who can see pitfalls before they stop you or your organization from closing. Mortgage processing companies can also provide resources for the mortgage broker community with access to lending companies and program support. Here you can place loans, get answers to questions, and network with other successful broker companies.

Types of Loan Processing

There are various types of loans available to individuals and organizations, and having a mortgage processing company expertly handle your transaction will ensure quality service during the loan process. The mortgage processing company can expertly handle loan types such as conventional, FHA, VA, and USDA.

Conventional mortgages are the most commonly used type and usually have the best rates. A small business will typically require at least a 10% down payment and good credit to qualify for the loan. This loan can be for 15 or 30 years, or "interest only" where the company is not paying any principal in the payment. FHA loans have the lowest down payment available that can go as low as 3.5%. However, FHA loans require the purchase of mortgage insurance, and payment of the insurance premiums is the responsibility of the borrower. Mortgage insurance is a policy that protects the lender in case the borrower stops making payments on the loan. This allows lenders to offer loans with less than a 20% down payment. VA loans do not need any down payment, but the borrower must be a veteran. VA loans are therefore zero down payment loans. A USDA Rural Housing Loan is also a zero down payment loan, but this loan facility can only be accessed in designated areas that are based on a particular definition. Mortgage processing companies will be able to take the stress and confusion out of the loan process as it brings expert advice in an industry that is teeming with many offerings.

In order to choose the right loan, expert advice is best outsourced. A mortgage processing company will possess the human resources with the sound processing knowledge, experience and expertise to guide its clients towards choosing the best possible loan, while making the process as painless and as easy as possible.

Mortgage Processing helps many companies cut costs. There are many Contract Mortgage Processor Services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.

Mortgage Outsourcing: The Key to Saving At-Risk Clients

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With the current financial crisis, and the number of delinquent loans that banks are forced to carry, the advent of mortgage outsourcing is becoming very attractive to many lending institutions. Mortgage outsourcing companies are better equipped to handle loans in trouble and, since they specialize in mortgages only, can concentrate their resources on assisting individuals by reaching out to them at a faster rate than the bank. Banks would do well to sell their mortgage portfolios to outsourcing companies in order to manage the program more effectively.

Delinquent Loan Handling

Loan servicing and foreclosure services areareasa bank definitely needs to hand over to a specialist company that can push resources toward helping its mortgage clients keep their homes. Banks need to focus on attracting customers and clients with excellent credit ratings and leave the at-risk clients to a mortgage outsourcing firm.

Reputation Management

If a bank is able to engage in mortgage outsourcing it will be able to manage its reputation in a better way. Some individuals wrongfully perceive banks as large entities that cause them to lose their home; in other words, to lose their biggest investment. A partnership with a mortgage outsourcing company places the bank in a better position to help borrowers keep their homes or to identify ways to rent their own homes so that they avoid a foreclosure. This way, big financial conglomerates appear to be more humane in treating with at-risk clients and customers.

Meeting Regulatory Requirements

Banks can ill afford regulatory penalties and need mortgage outsourcing services to assist them in meeting the requirements of the Consumer Financial Protection Bureau. This institution has implemented new rules to assist at-risk borrowers in receiving quick and proactive assistance once they make a cry for help. Banks are required to provide the necessary help to troubled borrowers within thirty days of receipt of request for consideration. Banks do not have the staffing and structure to immediately address these regulations. This is where mortgage outsourcing is the solution to the problem. Mortgage outsourcing firms do have the know-how, resources, and expertise to address at-risk mortgages within the stipulated time frames.

Foreclosure Solutions

Banks provide predefined products and services to their clients who must meet particular criteria to quality for help. However, a client may be creditworthy today and bankrupt tomorrow; the bank has no control over the future of their clients’ credit. Other institutions that possess the ability to develop solutions to meet at-risk clients’ needs can tailor plans to help clients not to lose their homes. A solution that was developed by a mortgage outsourcing company to help clients keep their homes is renting the home to avoid a foreclosure. These types of solutions can be easily developed by mortgage outsourcing companies who can move quickly and nimbly to assist people in their time of financial need.

Improved Service Levels

When a client does not meet the standards of creditworthiness required by the bank, and policies and procedures at the bank cannot be flexed to meet client needs, the service is immediately perceived as poor. At-risk clients complain about getting the run-around, documents that cannot be located, and impersonal and distant service. Banks cannot afford to ruin their reputation by at-risk clients; they must be sent to experts in the field to provide the service levels they need. Clients who are on the brink of losing their greatest investment need a special kind of care and attention that can be more adequately provided by a mortgage outsourcing strategy.

Mortgage Outsourcing helps many companies cut costs. There are many Contract Mortgage Processor Services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.

Roles and Responsibilities of the Contract Underwriting Company

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If you are in the business of providing real estate loans then you may want to consider using the services of a contract underwriting company. These companies provide underwriting for mortgage loan applications and possess the know-how and competencies to evaluate, select and deselect applicants, and to ensure that your business demonstrates prudent risk management. These companies exhibit a high level of expertise in evaluating loans for acquisition of real estate and operate in accordance with systematic policies and procedures to protect their clients from unnecessary risk.

Functions and Responsibilities

Contract underwriting companies are guided by a set of rigorous credit standards against which all loan applicants are measured. The measurement criteria are robust and will either meet or exceed the standard of the lending institution. A contract underwriting company will typically be well versed in evaluating credit risk, and small companies that assist ordinary people to acquire loans for home mortgages may want to identify the benefits of using their services. Before you consider outsourcing your underwriting function to a contract underwriting company you will need to understand the roles and responsibilities of such an institution in assisting you in meeting and exceeding your risk management goals.

Investigator

Underwriting may be considered as one of the most critical stages in the mortgage loan application process. The contract underwriting company will process your loan files by reviewing them with an in-depth level of scrutiny. They are trained to uncover fraud, appraisal errors, false information, forged documents, appropriateness of comparable properties, and much more. In essence they protect small businesses from unnecessary risk and provide their findings and recommendations regarding approval or rejection of the loan. They will ask potential borrowers to provide their most updated credit reports and check these reports against Fair Isaac Corporation Credit scores released via Trans Union, Experian and Equifax. Essentially, they will pick up any areas for concern, contact the borrower and further investigate reasons behind previous bankruptcies. These reasons will be assessed to determine viability and make an assessment on the current creditworthiness of the client.

Standard Bearer

While your lending institution will have credit standards by which applicants will be assessed, the contract underwriting company will raise the bar, acting as your own bureau of standards for assessing the risk involved in granting loans to applicants. They not only adhere to the lending institutions credit standards but operate by relevant benchmarks for managing risk and assessing appraisals. A contract underwriting company will implement foreclosure avoidance mechanisms, and a general set of best practices that ensure virtually risk-free loan approvals.

Recommender

By far the most crucial role provided by the contract underwriting company will be its recommendation to grant or deny the loan. This recommendation will only come after thorough and rigorous research is conducted on the creditworthiness of the borrower. With the recommendation of a contract underwriting company small businesses can rest assured that their credit risk management portfolio is intact. This will give small businesses the confidence to grant loans, knowing that they can avoid high incidences of foreclosure. They can be sure that their clients are solvent, have good credit ratings, and possess the right collateral. They can have the confidence that they are doing business with well-qualified clients who will be able to pay off their mortgages and avoid foreclosure.

Mortgage Loan Processors helps mortgage brokers and bankers cut costs. There are many Outsourced mortgage loan processing services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure success.

The Three Most Important Questions in Mortgage Underwriting

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Purchasing a home is one of the biggest investments you will make in your lifetime, and preparing yourself to acquire a mortgage is of utmost importance. Once you apply for a loan to purchase a home your application will be subjected to mortgage underwriting, and you will be assessed in three key areas. Once you complete your application for a loan the lending institution will process your application through a number of intricate steps to ensure that you meet their creditworthiness criteria. The role of the mortgage underwriter is to ensure that you are a customer who can consistently make mortgage payments, and on time. The three most important questions the underwriter will ask are in the following areas: credit history, collateral, and financial solvency.

The Role of the Underwriter

Mortgage underwriting is the process of determining the level of risk involved in offering you a loan. The mortgage underwriter will always evaluate you against a set of guidelines and loan criteria, and will seek to match your financial profile with their predefined criteria. If you meet the standard required your loan has a good chance of being approved, if you do not meet the criteria your mortgage loan application may be rejected. It is within the mortgage underwriting process that a decision will be made to grant or deny you access to a loan.

Credit History

What is your credit score? Make sure you have a good credit history before you seek to obtain a mortgage loan from a financial institution. A few factors that influence your credit score include: making payments on time, ignoring your cash advance facility, and staying at least 30% below your credit limit. The lending institution's mortgage underwriting department will scrutinize every aspect of your credit history to ensure that you are a good candidate for a loan. They will look at the number of accounts that you have, the length of time you have had them, your credit cards and payment patterns, and any loans you have and how you have been coping with repayment in general.

Collateral

What type of property are you purchasing and what is the value? Collateral in a mortgage loan situation refers to the value of the property you are seeking to purchase as well as the type. Mortgage underwriting wants to know about the home you are seeking to purchase and will not allow your loan to exceed the value of the property. Mortgage underwriting ensures that the home is accurately appraised by an appraiser of their choice. Once they obtain the current value of the home the mortgage loan will not be in excess of this amount. Mortgage underwriting reviews the type of home you are seeking to purchase. Is the property an investment property or an owner-occupied home? Historically, lenders have a greater propensity to foreclose on an investment property than on an owner-occupied home. It is therefore considered a more risky application.

Financial Solvency

Do you have the wherewithal to repay the loan? This is one of the key questions that the mortgage underwriter will ask. Mortgage underwriting includes the determination of your financial solvency. Can your income comfortably cover your monthly installments? What is your debt income ratio; can you meet your monthly financial commitments and still afford your mortgage? What are your savings like; if you are in between jobs will you be able to meet your financial commitments comfortably? Mortgage underwriting ensures that you are solvent enough to acquire a loan.

Mortgage Outsourcing helps many companies cut costs. There are many Contract Mortgage Processor Services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.

Key Roles and Responsibilities of Mortgage Outsourcing Companies

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Mortgage outsourcing companies offer attractive services to financial institutions that provide home loans. One might think that mortgage processing is a simple task; however, the level of intricacy involved in processing a mortgage application is often very high. Qualified and experienced staff makes the mortgage loan process more efficient, and mortgage outsourcing companies usually recruit experienced loan officers and underwriters; these professionals are critical to effectively managing the mortgage application process and providing outcomes of efficiency, customer satisfaction, and prudent risk management.

Mortgage Loan Officer

Mortgage loan officers start the loan process with the customer, and their role is crucial in taking the application to the next stage, which is underwriting. Since the federal government requires that mortgage loan officers are certified, mortgage outsourcing companies remain compliant by ensuring that their mortgage officers have specialist designation, including Residential Loan Officer. By placing your business in the hands of a mortgage outsourcing company you can be assured that experts in the field are effectively and efficiently managing your mortgage process.

Responsibilities of the Mortgage Loan Officer

The loan officers at mortgage outsourcing companies assist customers in completing the application form. They gather pertinent information from the customer that assist in determining the probability that the loan will be repaid in full. Once the potential homeowner completes the application form the mortgage loan officer will verify the information provided, conduct a thorough analysis of the data, and make a judgment on the creditworthiness of the customer. Loans officers at mortgage outsourcing companies usually demonstrate sound financial judgment, resulting from education and training.

Mortgage Loan Underwriter

The underwriter provides a back office service and will not normally interact with your customers up front. The mortgage underwriter provides a critical role in the mortgage process. There is no loan that will close unless it is reviewed, assessed, scrutinized and judged by the mortgage loan underwriter. This is why mortgage outsourcing companies ensure they are staffed with experts in this area. Good judgment is critical to this role, and their recommendation to grant or deny a loan is often the final step in the mortgage loan process. The mortgage loan underwriters at mortgage outsourcing companies ensure that all loan guidelines are met. They review housing appraisals to ensure that they are not above or below market value so that the actual amount of the loan matches the real value of the property. While many mortgage outsourcing companies use an automated underwriter they still have a team of qualified and experienced underwriters who address gray areas that cannot be solved by automation.

Responsibilities of the Mortgage Loan Underwriter

The mortgage underwriter will assess mortgage paperwork and documents across five key areas: credit, appraisal, fund, income, and title. At the end they will provide a detailed report to substantiate their recommendation. They will provide analyses in the following areas: credit analysis, property analysis, income analysis and title analysis. The credit analysis will determine the applicant’s creditworthiness, and credit reports and documents identifying credit history patterns will be evaluated for evidence of risk. The property analysis involves a review of the appraisal report and all real estate issues are evaluated. The applicant’s solvency will be determined by income analysis; the most important factor here is the ability to pay off the loan. The title analysis ensures that the property and legal ownership issues are verified.

Mortgage Outsourcing helps many companies cut costs. There are many Contract Mortgage Processor Services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.

Top Three Mortgage Underwriting Services

Many financial institutions today are engaging mortgage underwriting services to ensure that their operations are agile and that this process is handled with the highest level of expertise. These services are a tremendous benefit to financial institutions, as they are executed without the burden of a large internal headcount. The mortgage underwriting process must be thorough and due diligence effectively carried out to ensure that the loan portfolio of a financial institution has minimal risk. Mortgage underwriting involves the evaluation of borrowers against stipulated criteria to ensure that the risk is negligible. Financial institutions sell mortgage loans in large quantities, and mortgage underwriting services provide timely and accurate results on the creditworthiness of a potential borrower. It is in the best interests of financial institutions to outsource this process to improve customer satisfaction regarding time frames for loan processing, and effectively manage risk. Additionally, there are several value added advantages derived from utilizing underwriting services that would not be readily available if provided through internal staff.

Automated Underwriter

Since borrowers are evaluated against a fixed criteria automated systems can easily run a report on the feasibility of approving a loan to a potential customer. An automated system evaluates each borrower in a very short space of time, based on the information provided on the application for the loan. Once the information is verified, the data can be inserted into the automated underwriter and a response generated almost immediately. The response indicates whether the loan should be approved or denied.

Home Appraisal

One of the functions offered by mortgage underwriting services is providing an appraisal of the home for purchase. Both federal and individual financial institutions have implemented rigid appraisal guidelines following the real estate ignominy in 2002. It is imperative that mortgage underwriting services adhere to the financial institution’s guidelines. The appraisal review will provide the underwriter’s perspective on the value of the property to ensure that it is not above market value. Make sure that your mortgage underwriting service reviews the sales history of the property, and assesses appropriate comparable properties. The appraiser’s signature and license number must be checked for authenticity.

Fraud Reporting

To assist financial institutions in avoiding fraud with house loans, mortgage underwriting services will provide a fraud guard review. Loan files must be carefully scrutinized for incidences of fraud. Mortgage underwriting services are experts at accessing archived appraisal data, detecting fraudulent appraisals, and uncovering red flags that are indicators of fraud. Financial institutions need to protect themselves from the risks and the exorbitant costs associated with mortgage fraud. Financial institutions must implement vigorous operational controls, policies and procedures aimed at fraud protection and detection. Mortgage underwriting services usually meet and exceed these standards to ensure that their clients are well protected and can rest assured that the propensity for fraudulent cases to be approved is negated.

Banks and other lending institutions are outsourcing to mortgage underwriting services to provide these three critical functions that protect their companies from fraud, provide accurate appraisals, and offer timely completion of the underwriting process. This reduces the bank’s headcount significantly and provides them with an opportunity to improve customer satisfaction regarding loan processing time frames.

Mortgage Loan Processors helps mortgage brokers and bankers cut costs. There are many Outsourced mortgage loan processing services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure success.