Origination
Candlefocus Editor3After the loan estimate is approved, the loan originator moves on to the closing process. During this phase, the loan originator makes a list of all of the documents that the borrower needs to sign. These documents generally consist of the mortgage loan agreement, closing costs, title commitment, promissory note and deed of trust.
4The closing is the final step of the origination process. The loan documents are signed and the escrow company is notified to release the funds for the transaction. During this stage, the loan originator is also responsible for making sure that the underwriter has completed all checks on the property.
The origination process is overseen by the Federal Deposit Insurance Corporation (FDIC) to ensure lenders are following all local rules and guidelines, such as the Truth in Lending Act, Real Estate Settlement Procedures Act, and the Equal Credit Opportunity Act. The FDIC also ensures they are following all RESPA (Real Estate Settlement Procedures Act) guidelines in which all players must be working in good faith, not inflating fees and not misrepresenting the loan products.
It’s important that the loan originator and the loan processor always remain in constant communication with one another during the whole origination process in order to verify all documents and updates, meet respective deadlines and ensure that there are no delays in processing.
The origination process is an important step in the home-buying process and is key to securing a successful loan closing. This process begins when a borrower connects with a loan originator and includes a pre-qualification, application, and closing procedure. During the process, all required documents are gathered and verified. The loan originator and loan processor are in constant communication to ensure that all documents are in order and all deadlines are met. The origination process is monitored by the FDIC to ensure that lenders are meeting all RESPA and other local and federal regulations to provide borrowers with a fair loan transaction process.