How to Be Loan Processor - Job Description, Skills, and Interview Questions

Feb 5, 2021 / 5 Minutes Read / By Albert

How to Become

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The rise of online banking and loan processing has caused a shift in the way people apply for and receive loans. This has resulted in a greater rate of approval for loan applications, quicker turnaround times, and more streamlined processes. As a result, more people are able to access the loans they need to make their lives better, and the economy as a whole benefits from increased consumer spending. Additionally, this shift has created more jobs in the banking industry, allowing people to gain the skills necessary to make a career out of loan processing.

Steps How to Become

Obtain a high school diploma or GED. Most loan processor positions require a high school diploma or equivalent.
Pursue postsecondary education. Although not mandatory, some employers may prefer loan processor applicants who have completed courses in business administration, finance, accounting or economics.
Complete on-the-job training. Many employers provide new loan processor employees with comprehensive training programs, which typically include job shadowing and hands-on experience.
Obtain the necessary certifications. Although certifications are not mandatory, those who possess them may have an advantage in the competitive job market. The National Association of Mortgage Processors offers several certifications for loan processors.
Develop a professional portfolio. Loan processors should create a professional portfolio that includes a resume, references, cover letter and any other relevant documents that demonstrate their skills and qualifications.
Join a professional organization. Becoming a member of a professional organization such as the National Association of Mortgage Processors is beneficial for networking and staying current on industry news and trends.

The loan processing process is an important part of obtaining a loan. The process involves validating the applicant's creditworthiness, verifying the information provided on the loan application, and ensuring that all documents are in place. When done correctly, it is a reliable and efficient way to ensure the loan is secure for both the lender and borrower.

Unfortunately, when the loan processor is not well qualified or experienced, there can be serious consequences. Delays in the approval process, incorrect paperwork and inaccurate information can lead to costly mistakes that could result in the loan being denied or granted with unfavorable terms. it is important for lenders to ensure that their loan processors are reliable and qualified to ensure the process goes smoothly.

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Job Description

Review loan applications to ensure accuracy and compliance with regulations.
Verify and analyze applicant information, such as income, credit history, and assets.
Contact applicants and solicit additional information or documentation as needed.
Submit completed loan application packages to underwriting.
Prepare and present loan approval packages to management or loan committee.
Negotiate terms and conditions of loans with applicants.
Update loan status in database and monitor progress of loans through closing.
Prepare closing documents and disbursement instructions for closing agents.
Review closing documents for accuracy prior to closing.
Monitor post-closing conditions and provide guidance to underwriting staff for loan modifications or releases of conditions.

Skills and Competencies to Have

Knowledge of financial products and services
Excellent problem solving and analytical skills
Detail-oriented approach to work
Ability to manage multiple tasks and prioritize workload
Familiarity with banking regulations and guidelines
Excellent customer service skills
Good communication and interpersonal skills
Proficiency in Microsoft Office Suite
Knowledge of loan processing procedures and software
Ability to work in a fast-paced environment
Strong organizational skills and attention to detail

Being a Loan Processor requires a vast array of skills, but the most important skill to have is strong attention to detail. This is because loan processors must review and analyze financial information, such as income, assets, and credit scores, to make sure that borrowers meet the criteria for the loan. They must also verify accuracy of documents and make sure that all relevant information is included in the loan application.

Poor attention to detail can lead to errors in the loan process and can result in a rejection of the loan application. it can cause delays in the loan processing timeline, resulting in a longer wait time for the borrower to receive their funds. Good attention to detail is critical to ensuring that the loan application is accurate, complete, and submitted in a timely manner.

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Frequent Interview Questions

What experience do you have with loan processing?
Describe a time when you had to handle a difficult loan application process.
What steps would you take to ensure accuracy and compliance when processing a loan?
What challenges have you faced while processing loans?
How do you prioritize loan applications and ensure timely processing?
What strategies do you use to build relationships with lenders and borrowers?
How do you stay up to date on laws, regulations, and industry trends related to loan processing?
What processes do you use to manage data and documents related to loan processing?
How do you handle customer inquiries or complaints about loan processing?
How do you ensure accuracy and compliance when preparing loan documents?

Common Tools in Industry

Loan Origination System (LOS). A software application used by lenders to track and manage loan information from the initial contact to the closing of the loan. (eg: Encompass by Ellie Mae)
Automated Underwriting System (AUS). A software system used to assess creditworthiness and verify the accuracy of a loan application. (eg: Desktop Underwriter by Fannie Mae)
Document Management System (DMS). A software system designed to store, organize, and secure documents related to loan applications. (eg: DocuSign)
Loan Servicing Software. A software system that provides lenders with the tools to manage loan servicing and collections. (eg: LoanServ by Fiserv)
Credit Reporting Software. A software system used to collect and store credit information on loan applicants. (eg: Experian Connect)
Compliance Management Software. A software system used to ensure lenders are compliant with the applicable laws, regulations, and guidelines. (eg: ComplianceEase)
Fraud Detection Software. A software system used to identify suspicious activity related to loan applications. (eg: LexisNexis Mortgage Fraud Manager)

Professional Organizations to Know

American Bankers Association
Mortgage Bankers Association
National Association of Professional Mortgage Women
National Association of Mortgage Processors and Underwriters
Mortgage Industry Standards Maintenance Organization
National Association of Mortgage Brokers
National Credit Union Administration
Financial Services Roundtable
National Association of Realtors
Consumer Financial Protection Bureau

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Common Important Terms

Loan Origination. The process of creating a loan agreement, including establishing the borrowers eligibility, collecting all necessary documentation, and preparing the legal documents for the loan.
Loan Underwriting. The process of assessing the creditworthiness of a borrower and determining whether to approve or deny a loan.
Credit Report. A report from a credit bureau that contains information about an individuals credit history, such as payment history, outstanding balances, and other related data.
Collateral. Property or other assets pledged as security for the repayment of a loan.
Debt-to-Income Ratio. The ratio of a borrowers total monthly debt payments to their total gross monthly income.
Contingency Plan. A plan outlining what will happen in the event of a borrowers failure to repay a loan.
Prepayment Penalty. A fee charged to a borrower who pays off a loan before the end of its term.

Frequently Asked Questions

What is a Loan Processor?

A Loan Processor is a person who works in the finance industry to review, verify and process loan applications for banks and other lenders.

What are the duties of a Loan Processor?

The duties of a Loan Processor include verifying income, assets, and credit history; collecting the necessary documents for the loan application; and preparing loan packages for underwriting.

What qualifications are required to be a Loan Processor?

To be a Loan Processor, you typically need a high school diploma or equivalent and previous experience in banking or financial services. Knowledge of banking regulations and loan products is also required.

How much does a Loan Processor earn on average?

According to Payscale.com, the average salary for a Loan Processor is $36,964 per year.

What type of skills are important for a Loan Processor?

Important skills for a Loan Processor include attention to detail, customer service, organization, problem-solving, accuracy, and knowledge of banking regulations.