The Many Fingers in the Mortgage Pie

While it’s easy to imagine that the mortgage process involves only yourself and the guy or gal behind the desk who takes your application, there are many people involved, each with his or her own duties. So, just who has their finger in your mortgage pie and why?

The mortgage process typically has the following participants:

• The creditor

• The debtor

• The loan officer

• The loan processor

• The underwriter

• The appraiser

• The escrow company

• The title company

The Creditor

Colloquially known as “the lender,” the creditor in a mortgage loan is technically called the mortgagee. This is the lending institution that provides the loan for the property you are purchasing.

The Debtor

A debtor is more commonly known as a borrower and technically called the mortgagor. This is the party that receives the loan, owing a debt to the creditor.

The Mortgage Broker

A mortgage broker is a person who brokers loans. That is, he or she shops a variety of lending institutions to find you the best rates and terms.

The Loan Officer

This is typically the first person you meet when applying for a mortgage loan. The loan officer takes you through the application process, counseling you on which documents to submit. The loan officer acts as the lender’s contact person for you, your real estate agent, and other participants of the mortgage process.

The Loan Processor

The loan processor is the person employed by the lending institution to ensure that all of the necessary documentation is present and to verify it for accuracy.

The Underwriter

The underwriter is the most important person in the mortgage loan process for it is he or she that determines whether or not you get the loan. The underwriter’s primary duty is to determine the risk of lending you the amount requested and whether or not that risk is acceptable, according to standards set forth by the lender.

The Appraiser

While a licensed appraiser is typically available for hire by anyone, each lender subcontracts or employs its own appraiser. This person is responsible for determining the value of the property for which you need the loan.

Escrow Company

The escrow company is an independent third party to the transaction whose duties include the receipt and disbursement of funds, based on the mandates of the contract.

Title Company

In some states and regions, the title company is also the escrow company. The title company’s main job is to check the chain of title – the list of successive owners of a property – for anomalies and issue the title insurance policy.

Depending upon the region, it is the escrow officer, title company representative, or an attorney who guides the transaction through the settlement process.

Like many unfamiliar concepts, the mortgage process is easier to understand when it’s broken down into its many components. Even though it seems as if the process involves only a few actors, the mortgage is actually a huge pie with many fingers thrust into it.