Market Analysis: You Can’t Fix What You Don’t Know

*You Can’t Fix What You Don’t Know*
**By Tony Garritano**

***A friend asked me a few weeks ago how many people are involved in the processing of a loan. It seems like a simple question, but it really isn’t. After thinking about it I thought: How can we fix the mortgage process if we don’t have a clear handle on exactly how many people go into processing a loan? So, I turned to some experts for help in this matter. Here’s what I found:

****When I asked Eric Kujala, National Sales and Consulting Manager at paperless and e-collaboration vendor DocVelocity, he told me:

****“We really view the loan origination process as an assembly line, as do most people. Walking through a company’s assembly line helps us interpret the “day in a life” of a loan file. This is what we typically see in a paper-based assembly line for a retail lender, for example. Wholesale is similar but the steps may change slightly. Also, with the regulation changes, most people’s first reaction is to “add” more steps to the assembly line. Our customers are starting to consolidate those steps based on efficiency gains.

****Here’s how it works for them:

****1.) The loan office typically will deliver initial disclosures based on the borrower’s request and/or technical capability on their end.

****2.) Those docs, once returned, typically get passed to a processor or some kind of management review to “ok” the file.

****3.) Recently, simultaneously, due to regulation changes again, a fulfillment team may review them for accuracy for GFE and TIL compliance. Sometimes this step may happen on behalf of the loan officer sending the disclosures to reduce restitution errors at the end.

****4.) Then the loan file may go to a “junior underwriter” to order and review low-level conditions like signature review of disclosures, ID documents, etc.

****5.) Finally the file gets passed to an underwriter for review.

****6.) Let’s assume that the file goes clear to close on first submission, which doesn’t happen, then it gets passed to a closer. The closer prepares closing docs.

****7.) The closing docs get sent to a title company to facilitate closing that could get passed to a notary etc.

****8.) Executed closing docs are typically overnighted back to the management company. Once there we often find a person or small team who is responsible for opening the returned packages and marry up the loan file with the closing docs.

****9.) Then they get sent to a post closer for review and construction of the investor delivery package happens. We have seen these individuals either scan the investor package themselves or a small team is designated to scan and deliver the investor package.

****10.) Once delivery is completed then a designee will take the whole file and send it to the archival repository, which in most cases has been electronic or hard files to an iron mountain etc.

****Now those are just the steps internally. We often see a QC process take place during the assembly line process in varying stages. This person or persons will review a file midstream or at the end of the process. This also does not include any third parties that may need to collaborate on a loan file line adverse action review, or a title company, or fraud detection services etc. In addition this assumes that the loan is perfect the first for a single touch underwrite.”

****So, as Eric was going through this I isolated at least 20 different people involved in the loan and in most cases those 20 people touch the loan at least twice. If that doesn’t scream out for a better process, I don’t know what does.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at