RC_LP_P_200.1 Processing Fundamentals

In preparing a loan file for submission to the underwriting team, the processor plays a vital role in the loan production process. In essence, the processor is the "traffic light" that keeps the flow of information moving down the highway to loan approval. The loan file tells the story of the loan, and underwriting bases the important decision of whether or not to approve a loan on the information contained in it. In turn, secondary market investors buy the loan with the assumption and expectation that the loan file information is accurate and the underwriter's approval decision was valid. The consequences of faulty information could include fraud, loan default, an investor requiring the lender to buy back the loan, and regulatory compliance issues. In short, a great deal depends on the completeness, accuracy, and validity of loan file documentation, and the processor's role is critical.

Processing Fundamentals introduces concepts related to the processing function. The course begins with a look at the work environment and typical processing department structure. Next, the course addresses specific tasks of the loan processor, including communicating with the applicant, complying with regulations, reviewing the loan application, documenting the file, scheduling tasks, reviewing loan documents, reviewing the appraisal, preventing fraud, and submitting the loan file to underwriting. The course then describes key federal laws that affect loan origination, including the Truth in Lending Act, the Real Estate Settlement Procedures Act, fair lending laws, and credit-related laws, among others. Next, the course examines the automation of the loan production process and how it affects the loan processor’s role. Finally, the course studies the essential calculations for preparing a loan file for underwriting: the housing-to-income ratio, monthly housing expense, debt-to-income ratio, total monthly debt, and the loan-to-value ratio.

This is a single-family/residential course.