Anatomy of the Loan Process

Yesterday after our office meeting we were treated to a refresher course on the life of a loan application.  Ephraim and Theresa of Odette Mortgage were most patient with us taking us through the “flow chart.”   I will try to synopsize it here.  The steps are as follows:

1)  The borrower is pre-qualifed — loan agent takes verbal information from borrower and assesses, based on income and debt, what the borrower is qualified to borrow.  Loan officer gives the borrower a letter stating what he will pre-qualify him to borrow.

2)  Borrower makes an offer and gets into contract on a house using the aforementioned letter.

3)  The borrower must produce all of the documentation supporting what he has verbally told the loan officer.  The loan officer puts this together with a copy of the contract, the title report and the appraisal and submits it to the bank’s underwriting department.

4)  The underwriting department checks his “need” list against the documentation supplied and makes sure everything is acceptable.  Generally there are some things that still need to be supplied, (like evidence of insurance for the home or a current pay stub) so the underwriter will stamp the loan file “approved” subject to some conditions.

5)  The borrower and the loan officer work together to gather and/or fulfill these conditions.

6)  Loan documents are ordered and they are sent to the Escrow company.  The Escrow officer makes arrangements for the borrower to sign.

7)  The Borrower signs the loan documents and the Escrow company sends the documents back to the bank.

10)  The Bank looks at the loan documents one more time and then they call the “funder” (the department that sends the money).

11)  The funds from the bank arrive in the Escrow company’s account and the Escrow officer gives the okay to record the Deed at the County Seat.

Viola — everybody is done and the property changes hand.

So there it is, plain and simple, right?  Not so fast.  There are about a gazillion things that can happen in between all of these lines but this is BASICALLY the framework for how the loan process works from start to finish.