The Flow of the Loan
We have all seen the TV Mortgage ads for Loan refinancing. They also offer, for the various banks and lending institutions; purchase loans for the first time buyer needing a mortgage. Many of the loan ads, not all but probably most; are placed by mortgage brokers. For many borrowers this is the start of the process in obtaining from the bank, or other lending institution their mortgage. The mortgage broker both services the demand from borrowers, and, to a large extent stimulates demand by actively advertising mortgage products.
Long prior to any involvement of a loan officer or notary public, it is the mortgage broker who assists the borrower to find the right loan from an often bewildering (to the mortgage applicant) variety of loan offerings. The mortgage broker really is the “first face” the borrower sees, however this “face” is often a computer screen when the initial mortgage / loan application is filed. With application on file, the mortgage broker selects and suggests a mortgage product.
This front end process includes analysis of the applicant’s credit, capital, and income level. A mortgage is selected and the application is transferred to a specific lending institution or bank. Now it is the loan officer’s turn to review and often approve the application. At this point the mortgage application often becomes property specific, and the loan officer factors in the relevant aspects of the property. Typically the mortgage requires title insurance, funding of an escrow account, arranging for a notary to notarize the documents, etc. Many hands assist, but the bank loan officer really is in charge.
Though the loan officer is supervising the mortgage approval process for the bank or lending institution, the title insurance company now typically has a leadership role. Only the title insurance company takes any actual risk. They guarantee, basically to the bank; that the loan is secured by clear title to the property as loan collateral. Often it is the title company that arranges for the notary to be dispatched to the borrower with the mortgage loan package. They may use a “signing service” or directly contact a known to be competent notary public familiar with mortgage loan documents.
The loan officer now waits for the title company to issue the required insurance, as the bank or lending institution will not grant the mortgage loan without it. The title company waits for the notary public to return the often date sensitive set of documents. Any real flaw causes all prior work to be redone – a “redraw” – as the mortgage loan rate “lock in” can have expired. The mortgage broker, the loan officer, the bank and lending institution are all depending on the notary public to get the requisite signatures and initials – correctly.
When all parties do their jobs competently, it’s a smooth and efficient process. In most loan packages there is a “first payment coupon”. When that little sheet of paper “becomes valid” all of the prior work is successful. The mortgage is granted, the mortgage broker and loan officer receive their commissions. The borrower moves into the property. The lending institution holds a note and mortgage, securing the property. And, joy of joys, last but certainly not least in importance, you, the hard working, reliable, and always accurate notary public is issued a check!