If you’re a commercial real estate investor, you probably finance your property purchases through loans. Applying for a mortgage and receiving approval can be a lengthy process, involving several stages. A mortgage loan processor is one of the very important links in the chain.
As a commercial real estate professional, you’ll most likely have dealt with the loan application process before. Nevertheless, you may be wondering exactly which part of the process is handled by the mortgage loan processor, who else is involved, and where they all fit in.
What is a Mortgage Loan Processor?
Also known as a mortgage loan originator, the mortgage loan processor handles the administrative part of a mortgage application.
They are integral to the process because they help keep everything on track and moving forward timeously.
The loan processor doesn’t engage with the borrower. They communicate only with the loan officer and the loan underwriter. Should there be a missing or erroneous document, they would revert to the loan officer to arrange with the client for the necessary corrections to be made.
What Does a Mortgage Loan Processor Do?
It is the responsibility of the mortgage loan processor to:
- Collect the documents from the mortgage loan officer
- Verify that all the documents have been completed correctly and that none of the documents are missing
- Save all documentation on a secure database
- Analyze the credit report
- Track all the deadlines
- Submit the application to the mortgage loan underwriter for final review
- Disburse funds once the loan is approved
Although analyzing the credit report actually forms part of the loan underwriter’s role, the loan processor often checks the borrower’s credit score to help avoid potential delays in the latter stages of the process.
Examples of When you Need a Mortgage Loan Processor
As a real estate professional, there are various scenarios where you would need a loan processor. Let’s look at some examples:
An investor is buying a commercial property and wants to take out a loan
The first step is for the investor to approach the lender which could be a bank or other financial institution. The loan officer helps the investor to find the right loan product and start the loan application. Once the loan officer has received all the documentation, they pass it on to the loan processor.
A commercial real estate broker is assisting their client in buying a property for which they need a loan
Commercial real estate brokers often maintain good relationships with certain lenders. A CRE broker may refer clients to a specific lender based on the high likelihood of the loan application being accepted.
Once the broker introduces his client to the loan officer, the client can either choose to have the broker continue to assist with the process or they can deal with the loan officer directly.
A developer is applying for a mortgage loan to assist him in developing a new retail mall
Once the developer has engaged with a loan officer to find the right loan product and has submitted all the relevant documentation, the loan processor gets involved to collect, analyze, and submit the application to the underwriter.
What’s the Difference Between a Loan Processor and a Loan Underwriter?
The loan processor and loan underwriter both form integral parts of the loan application process though their responsibilities are very different.
The loan processor is in charge of assembling and verifying all the documentation, while the loan underwriter analyzes the documentation together with the credit report and decides whether the loan should be approved or declined.
The loan underwriter often uses underwriting software to assess the amount of risk being taken by the lender.
Various pieces of financial information are assessed to ascertain whether the borrower meets the requirements of the loan, including credit history, debt-to-income ratio, and proof of other assets that could be used as collateral if necessary.
Once the underwriter has assessed the application, they would make the recommendation to the lender.
What’s the Difference Between a Loan Processor and a Loan Officer?
Loan officers and loan processors work together to ensure that the application process runs smoothly. The loan processor is the middle link between the front office: the loan officer, and the back office: the loan underwriter.
The loan officer collects all the documentation from the borrower (their client) and passes it on to the loan processor who assembles, verifies, and passes it on to the loan underwriter.
How to Become a Loan Processor
A loan processor role is a financial services role, so although the responsibilities are primarily administrative, it is vital that the candidate has a Bachelor’s Degree in Finance, Banking or Business.
Professionals interested in becoming a loan processor need experience in a financial institution and must take the National Multistate Licensing System (NMLS) Mortgage Education pre-training and pass the Mortgage License National Test.
Once they have a license, they’ll find employment at a bank, credit union or lender, and gain practical coaching on the job.
It’s important to have good communication and organizational skills if one is to succeed as a mortgage loan processor.
Final Thoughts on the Importance of Mortgage Loan Processors
The mortgage loan application process is complex and can be confusing if you’re not familiar with the various stages. Since the document requirements are stricter for commercial property mortgage loans than residential property mortgage loans, it’s even more important to have a streamlined and well-managed process.
Commercial real estate agents and brokers are known to work closely with preferred lenders and loan officers. This can be a mutually beneficial working relationship which allows for combining marketing efforts and sharing referrals.
Having an efficient process makes loan applications simple and hassle-free, and for it to work well, the loan processor role is essential.