Mortgage Loan Origination Activities
The Origination Flow
Origination moves through application, disclosure, processing, underwriting, conditional approval, closing, and funding. Know what happens at each stage and who is responsible. The loan originator gathers the application, provides required disclosures, and ensures the file is complete; underwriting evaluates credit, capacity, and collateral.
The Three C's
- Credit: history and score.
- Capacity: income and DTI.
- Collateral: appraisal and LTV.
Documents to Know
Pay stubs, W-2s, tax returns, bank statements, gift letters, and the appraisal report. Self-employed borrowers typically provide additional tax documentation. Verify that documents are current and consistent-underwriters look for unexplained deposits and gaps in employment.
Traps
Questions test sequencing: which disclosure comes first, and when. They also test documentation logic-e.g., whether a large deposit needs sourcing. Another trap is confusing prequalification (informal estimate) with preapproval (more thorough review) and with a full underwriting commitment.
Worked Example
A borrower reports $6,000 gross monthly income and $2,100 in total monthly debts. DTI = $2,100 ÷ $6,000 = 35%. If the proposed housing payment pushes total debt higher, recalculate. This illustrates capacity analysis before final approval.
Rule of Thumb
Follow the file: application → disclosures → processing → underwriting → conditions → closing. If a question asks "what happens next," locate the current stage first.