Mortgage origination is a term that is used to describe the process of creating a new mortgage contract. The lender who handles the actual creation is sometimes referred to as the mortgage originator. There are several steps that go into the creation of a mortgage, including drafting the proper legal documents, and filing those documents with the proper authorities. Effective mortgage origination also dictates that the content of those documents is in full compliance with any governmental regulations that are currently in place within the jurisdiction where the mortgage is written.
The process of mortgage origination is typically handled by a mortgage broker who is employed with a mortgage company, or a mortgage banker that is assigned the tasks of managing new and existing mortgages that are written by the bank. As part of the origination process, these professionals are well-versed in current regulations connected with offering mortgages to individuals and businesses. This allows the mortgage originators to update the basic contract templates if and when new governmental regulations that impact the terms and conditions of the contracts come into being.
Along with preparing and maintaining a lawful contract template, mortgage origination also involves the process of qualifying an applicant before writing the mortgage contract. Here, the originator investigates the credit history of the applicant, assesses his or her current financial condition, and generally makes sure the potential client is able to comply with the terms and conditions associated with the loan. This component of the mortgage origination process helps to minimize the risk involved with extending the mortgage, while also protecting the applicant from taking on more debt than he or she can reasonably manage.
The final phase of mortgage origination involves the processing of the signed documents, and the recording of the documents in a manner that is in compliance with local laws and regulations. This includes any internal procedures that the lender may utilize to track active mortgages, as well as filing the legal documents with the proper governmental agencies. Copies of the signed documents are also delivered to the borrower. Once the mortgage is properly recorded in private and public records, the process of origination is complete. In situations where a third-party mortgage originator is involved, the added step of providing documents to the lender as well as the borrower is also necessary, along with determining if the third-party originator is responsible for filing the documents with the appropriate agencies, or if the lender assumes that responsibility.