Mortgage processing services are an extensive and hyper-detailed set of steps that must be meticulously executed to avoid taking any bad lending decisions. Designating a single in-house resource to execute more than two of these mortgage processing steps increases the risk of mistakes as well as delays the entire process.
Factors such as mounting labor expenses, employee turnover rate, and constricting budgets are adding to a lender’s woes and inhibiting an efficient execution of the processes. Lenders have eventually realized the necessity of a third-party helping on a contractual basis to aid in efficient and accelerated execution of lending processes.
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Here are some of the most critical lending processes that are being outsourced to contract mortgage processing services providers.
Assessing borrower’s credit score
Contract mortgage processing services providers delegate experts who have the specific expertise to conduct an in-depth credit history check for borrowers.
This is the first step towards determining whether the borrower’s credit behavior is suitable enough to service a loan.
Experts leave no stone turned in meticulously executing processing starting from pre-screening credentials, social security statuses check to looking for payment defaults and existing loans, checking credit reports, tax returns evaluation. This aids the underwriters to take the right decision.
Document compliance assessment
Contract mortgage processing services providers conduct a thorough review of all the documents furnished by borrowers that include Forms 1008 and 1003, pay stubs, loan estimate, pay stubs, and others.
This is essential to ensure that the documentation adheres to all the pertinent state and federal regulations. Lenders also require external assistance in filing for VA case numbers online depending on requirements.
On the behalf of lenders, contract mortgage processing services providers delegate professionals who collaborate with licensed appraisers to conduct property appraisals.
Contractual experts ensure that such appraisals consider factors which are the amount of loan requested, loan-to-value ratio, specific property features, and current condition of the property.
These are the primary factors that are the determinants of the feasibility of the amount of loan requested. Secondary factors that should also be considered are property location and sales information of similar properties.
To conduct an extensive verification of all the documents submitted by borrowers is extremely crucial to identify and flag any potentially fraudulent activity. However, this is an added burden for small and midsize lenders who operated with limited in-house staff.
The feasible solution for them is to rely on contract mortgage processing services providers who ensure conducting a thorough checking of borrower certificates such as verification of employment (VoE), verification of deposits (VoD), verification of mortgages (VoM), and sales history of the property.
This is critical in establishing the feasibility of the amount of the mortgage loan requested. Such a thorough document verification is instrumental for lenders to avoid any future scenario of loan defaults or foreclosures.
Review supporting documentation
The external support of contract mortgage processing services experts is critical for a thorough evaluation of all the supporting documents. These documents include flood certificates, homeowner’s insurance, loan estimate disclosures, among others.
A thorough review of these supporting documents is important to understand a borrower’s ability to pay off the loan in full within the agreed timeline.
Outsourcing these processes to contract mortgage processing services providers has proven to bring accuracy and acceleration across all the stages of the long lending processes. This has helped lenders to optimize their costs, reduce the TAT of their services, focus on their core operations, and most importantly attain customer satisfaction.