Mortgage Lending Process

October 28, 2010

Something to consider in mortgage lending is the process. The process by which a mortgage is secured by a borrower is called origination. This involves the submission of an application and documentation related to the customer’s financial history. This information is then reviewed by an underwriter.

Sometimes, a third party is involved, such as a mortgage broker. This entity takes the borrower’s information and reviews a number of lenders, selecting the ones that will best meet the needs of the customer.

If the underwriter is not satisfied with what the borrower provides, additional documentation and conditions may be imposed, called stipulations. The meeting of such conditions can be a daunting experience for the consumer, but it is crucial for the lending institution to ensure the information being submitted is accurate and meets specific guidelines. This is done to give the lender a reasonable guarantee that the borrower can and will repay the loan. If a third party is involved in the loan, it will help the borrower to clear such conditions.

Documents typically required for underwriter review:

  • credit report
  • 1003 — Uniform Residential Loan Application
  • 1004 — Uniform Residential Appraisal Report
  • 1005 — Verification Of Employment (VOE)
  • 1006 — Verification Of Deposit (VOD)
  • 1007 — Single Family Comparable Rent Schedule
  • 1008 — Transmittal Summary
  • Copy of deed of current home
  • federal income tax records for last two years
  • Verification Of Mortgage (VOM) or Verification Of Payment (VOP)
  • Borrower’s Authorization
  • Purchase Sales Agreement
  • 1084A and 1084B (Self-Employed Income Analysis) and 1088 (Comparative Income Analysis) — used if borrower is self-employed
photo by: 401(K) 2012

Leave a Comment

Previous post:

Next post: