loanadministration, or housing loan administration, is a process by which homeowners are provided the services they need to make their mortgage payments. Loan administrators, as they are called, are third party organizations that provide a variety of services to help a homeowner to make their monthly mortgage payment. Mortgage companies offer loan Administrators to oversee many aspects of a homeowner's mortgage.
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The first service a Loan Administrator will provide is to create a new mortgagee clause. In order for a new mortgagee clause to be effective, the current lender must accept the terms set forth in the document. This process is known as "certification." Once the Mortgage Company accepts the new mortgagee clause, the Loan Administrator then begins foreclosure proceedings. The new mortgagee clause also instructs Bankruptcy court that the lender has full right to sell the property at auction if the borrower fails to make payment on the debt. This notification can prevent the borrower from selling the home before foreclosure has taken place.
Another service provided by Loan Administrators is to collect monies owed to a mortgagee. Mortgage loans have several parties; the lender, the mortgagee, and the Home Affordable Program (HAP). A homeowner may choose to use the services of a Loan Administrator to assist in collecting payments from all three parties. If the lender and the mortgagee do not agree on how payments should be collected, or if the foreclosure process has already begun, the loan administrator can provide guidance on managing the foreclosure. HAP pays the lender a portion of mortgage payments each month in order to provide financial support for homeowners, while the remaining payment is distributed by the Home Affordable Program to the homeowner.
What Does A Loan Administrator Do?
Loan Administrators often works with FHA, VA, or Freddie Mac Homebuyers. In these circumstances, the primary focus is on obtaining a first mortgage quote. Once a lender has made an offer on a home, the loan administrator will review the offer with the mortgagor and review any documentation submitted by the mortgagor. The administrator will make recommendations on whether or not the loan should be considered for purchase under the HAMP program. The loan administrator will also provide assistance with the qualification for first mortgage insurance premiums.
Loan Administrators will work in close conjunction with their lender, the FHA, Freddie Mac, or other third party lenders. During the pre-qualification process, the servicer will conduct credit and financial background checks to verify the mortgagor's ability to pay. If the information provided by the service is consistent with information previously provided by the mortgagor(s), the servicer will make a recommendation for financing. If financing is approved, the loan administration will pay all applicable third party charges. On the day of closing, the servicer will transfer all funds to the escrow account. All escrow balances will be held by the loan administrator in a separate account until all mortgage payments are complete.
The loan administrator will calculate the current value of the property at the time of closing using a formula based on historical sales data. After determining the current value of the home, the loan administrator will deduct the loan principal balance and apply a discount to the current value to determine the mortgage interest rate. The resulting mortgage payment will be set based on the amount by which the discount lessens the mortgage principal.
In order to become a licensed loan officer, a person must have earned an associate degree in business administration from an accredited business college. Prior to seeking loan administration services, an individual must pass all necessary exams. To qualify, the applicant must show that he/she has the ability to assess loan needs in the communities in which they would serve. Individuals who are unemployed or self-employed may be prohibited from serving as loan administrators. An individual who is bankrupt may also not be allowed to become a loan administrator.
Loan administration services are a great way for first time home buyers to reduce their mortgage payments. Lenders have streamlined the loan process, reducing paperwork and dramatically reducing the number of loan closings. Lenders are able to do this because of the increase in FHA, VA, and other government backed mortgage loans. With all of these programs currently in place, lenders cannot deny the application of a loan to a particular customer simply based on credit history or income level. While there are many benefits of obtaining a loan administrator to make managing your mortgage payments easier, you should be aware that many fees may apply.
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