As a mortgage broker, there are several critical documents you will need to have on hand to help your clients secure a mortgage. Collecting these documents and getting the data into your Broker LOS can be one of the most challenging aspects of preparing a loan package for the lender.
Document Types
Credit report
A credit report is used to assess the borrower’s creditworthiness and determine the interest rate they will receive.
Income verification
The lender will need proof of the borrower’s income, which can be provided in the form of pay stubs, W-2s, and tax returns.
Bank statements
Bank statements will be used to verify the borrower’s assets and cash reserves.
Appraisal report
An appraisal report will be needed to determine the value of the property being financed.
Purchase contract
A purchase contract will be required if the mortgage is being used to finance the purchase of a property.
Title report
A title report will be necessary to verify that the property has a clear title and that there are no liens or other encumbrances.
Homeowner’s insurance
The lender will require proof of homeowner’s insurance to protect their investment in the property.
Collecting and Generating Documents
Some critical documents are sourced from the borrower during the loan application process. These documents relate to the borrower’s credit worthiness.
Other documents have to be generated from within the Broker LOS. These require very strong integration with the POS system that collects the data from the borrower to avoid issues with mistakes, omissions, and double data entry. Pre-mapping the POS to the LOS is a critical step in improving the broker and borrower experience.
While brokers do need to follow local rules and regulations when working with lenders to originate loans, not all business processes are uniform. As a result many mortgage brokers need to generate custom documents as well from their Loan Origination System.
Technology
Unsurprisingly technology plays a major role in the effectiveness of Mortgage Brokers.
Mortgage broker point of sale (POS) and loan origination systems (LOS) are two essential mortgage softwares that work together to help brokers streamline their mortgage origination process. Here’s how they work together:
Mortgage broker point of sale (POS) system: A POS system is a software application that allows mortgage brokers to interact with clients and collect their loan application information. POS systems often include features such as a borrower portal, document management, and loan pricing engines.
Loan origination system (LOS): An LOS is a software application that helps mortgage brokers process and manage mortgage loan applications. It includes features such as credit reporting, underwriting, and loan closing tools.
The two systems work together in the following way:
Borrower information is collected in the mortgage broker POS system. The POS system can also perform some initial underwriting and generate a loan pricing estimate.
Once the loan application is complete, the broker can submit it electronically to the lender using the LOS system.
The LOS system can process the loan application and perform a more thorough underwriting analysis.
The LOS system can communicate with third-party service providers such as credit reporting agencies, title companies, and appraisers to gather additional information required for the loan.
Once the underwriting is complete, the LOS system generates the loan documents, which the borrower can often sign electronically. Some lenders go so far as to use Remote Online Notarizations to complete the closing process.
After the loan documents are signed, the LOS system can communicate with the lender to finalize the loan closing process.
Overall, mortgage broker POS and LOS systems work together to provide a streamlined and efficient mortgage origination process for brokers and borrowers. The POS system collects borrower information and generates a loan pricing estimate, while the LOS system performs underwriting, generates loan documents, and manages the loan closing process.