Warning: Constant WP_CACHE already defined in /home4/comcompare/public_html/blog/wp-config.php on line 4

Warning: Cannot modify header information - headers already sent by (output started at /home4/comcompare/public_html/blog/wp-config.php:4) in /home4/comcompare/public_html/blog/wp-content/plugins/ip2location-country-blocker/ip2location-country-blocker.php on line 1984

Warning: Cannot modify header information - headers already sent by (output started at /home4/comcompare/public_html/blog/wp-config.php:4) in /home4/comcompare/public_html/blog/wp-content/plugins/ip2location-country-blocker/ip2location-country-blocker.php on line 1985

Warning: Cannot modify header information - headers already sent by (output started at /home4/comcompare/public_html/blog/wp-config.php:4) in /home4/comcompare/public_html/blog/wp-content/plugins/ip2location-country-blocker/ip2location-country-blocker.php on line 1986

Warning: Cannot modify header information - headers already sent by (output started at /home4/comcompare/public_html/blog/wp-config.php:4) in /home4/comcompare/public_html/blog/wp-content/plugins/ip2location-country-blocker/ip2location-country-blocker.php on line 1987
The Important Guide To TPO Mortgage And How Does It Work?

The Important Guide To TPO Mortgage And How Does It Work?

Amanda Byford
Follow Me

About TPO Mortgage

When you decide to get a mortgage to purchase a new property or refinance your current mortgage, many entities would be involved in that transaction. Real estate agents, appraisers, underwriters, loan officers, etc. 

One of the most significant parties in this transaction is going to be your mortgage loan originator also known as MLO which could be an individual or a company. In this post, we will learn about third-party origination in detail.

What Is A Third Party (TPO) Mortgage Originator?

A TPO mortgage originator is an individual or a company that helps the lender in the mortgage loan process right from the application to the closing of the mortgage loan. 

Many lenders use third-party originators to market their service through online portals where the MLOs will contact the customers and understand their need for the loans and help the lender to take mortgage applications, underwrite, and closing of the loans.

How does Third-Party (TPO) Mortgage Origination Work?

Initially, the lender will have a signed contract with the TPO mortgage originators laying down the term of their service, roles, and involvement of the mortgage originators in the mortgage loan process. 

This could be marketing the lender’s services using different marketing strategies, taking loan applications online, assisting the lender in underwriting the loan, and assisting the lender to close on a loan.

Once the contract is signed between the lender and the TPO mortgage originator, the originator can start taking an application for a loan from the potential borrowers. 

The lender’s automated system will determine if the borrower is getting qualified based on the required loan parameters. 

If the borrower qualifies, the mortgage originator will request all supportive documents and will screen them before submitting them for underwriting and get an initial loan application signed by the borrower.

Once the documents are screened by the third-party originators, they will be submitted for underwriting with the lender’s in-house underwriting team or again a third-party underwriting firm or company. 

While the loan is underwritten, the third-party originator will be a mediator between the underwriter and the borrower. 

Any conditions that are held by the underwriter to close the loan will be shared with the borrower by the third-party originator.

Once the underwriter clears the file to a clear to close status, the originators will assist the borrower in sending all the closing disclosures to the borrower and set up a closing date with the borrower. 

Once the loan is closed all the documents are submitted to the lender and the servicing rights are handed over to the lender for the loan.

Why Does A Lender Get A Third Party (TPO) Mortgage Originator?

By signing up for a third-party mortgage loan originator, the lender will reduce the cost of processing, underwriting, and scheduling the closing for a loan. The lender can capture the online market as the originators also do their own marketing to acquire more clients. 

Since the mortgage originators are usually paid in form of a percentage on the loan, lenders don’t have to have fixed expenses compared to if they do it all in-house. 

Since this option is inexpensive, the lender can compensate the borrowers by providing more attractive interest rates and other lending terms.

Conclusion

All the third-party (TPO) mortgage originators need to have licenses so that they can originate loans on the lender’s behalf. 

The license is based on the state where the originator is planning to originate the loans. 

Your mortgage loan originators are the people that you would be constantly in touch with when you plan to get a mortgage or refinance your current one. 

Usually, mortgage originators have tie-up with different lenders and would only get paid once the loan is closed. This means that the mortgage originators would intend to find the best deal possible with the fastest closing time.

Amanda Byford

Amanda Byford has bought and sold many houses in the past fifteen years and is actively managing an income property portfolio consisting of multi-family properties. During the buying and selling of these properties, she has gone through several different mortgage loan transactions. This experience and knowledge have helped her develop an avenue to guide consumers to their best available option by comparing lenders through the Compare Closing business.

Leave a Reply

Back to top