Contract Loan Processing Business Cost Cutting Strategy
Mortgage institutions are closely monitored by the government via laws and regulations. They face inevitable challenges that are brought about by policy changes that occur in the real estate industry. These institutions also face managerial challenges that require extra budget allocation. With all this happening, most businesses will do everything to reduce their costs even if this means dismissing some workers. Nowadays contract loan processing is a cost-cutting strategy that several companies are using to solve their problems.
Contract loan processing is about outsourcing or delegating portions of your company’s mortgage processing work to a third party. By doing this you can either dismiss your in-house loan processors or shift them to other company departments. Outside processors normally undertake the entire origination responsibility and they deal with all providers of mortgages. Whether you are a broker, bank or any other lending institution, these companies will serve you. Contract loan processing will involve a contract between your company and the independent contractor.
The contract will include all the terms and conditions you will both agree on. Generally, an independent contractor is paid on each borrower file they attend to and the terms of payment are incorporated in an agreement. This agreement may be short-term or long-term depending on what you prefer. Many good companies can be used for an entire year without problems. It is extremely imperative to make sure that a contract loan processing company is duly licensed to operate in the U.S mortgage industry. Any licensed mortgage processor has to meet the industry rules and regulations.
Most of these contract loan processing organizations can do a lot for your business. They can handle the most time-consuming and strenuous task of loan origination very quickly. On your behalf, an independent mortgage processing company will receive and record applications forms using its huge data entry team. After this it will call each borrower requesting them to submit scanned copies of their documents by email or fax to speed up things. This self-governing team will also carry out your loan underwriting duties. Loan underwriters perform very difficult tasks to make sure that lenders accept to extend credit for purchasing a home. They are given the responsibility of deciding if a borrower’s file deserves to enter the approval stage.
To do this a contract loan processing team may validate the paperwork provided by a borrower once again. They do it manually and electronically with software. If they are not convinced that a borrower has the ability to refund the credit, they send the file back to the loan processing department. Underwriting also involves a search for the property title, a process that can be quite lengthy. Outsourcing enables you to concentrate on winning more customers through proper advertising methods.
One thing you need to know is that this type of a company does not do a similar business as yours. It helps you carry out your business. You absolutely have no reason to worry that a contract loan processing service provider will ask for your customers’ business. Even so, you have a responsibility to choose the best company that has a positive track record.