A loan processor works for a financial institution, evaluating loan applicants and issuing credit. A loan processor assesses whether to deny or approve loans on behalf of the bank, ensuring that funds are not at risk.
Loan processors deal with applications received from individuals and businesses, conducting interviews, checking references, preparing paperwork and acting as a liaison between the customer and the financial institution throughout the application, approval and establishment process.
When you are hiring a loan processor, you need to be sure that they possess the skills and abilities to be successful in the role. This article will highlight the tasks a loan processor performs, the soft and technical skills a good loan processor requires and the competencies they should be able to demonstrate.
You will also learn the best ways to test for these essential skills, to ensure the best candidate is hired for the position.
What should a loan processor be able to do?
The main tasks of a loan processor are centred around the evaluation, approval and establishment of new loans.
Loan processors verify the information provided on a loan application and decide whether the loan should be issued. This may involve contacting employers, other financial institutions, and other sources to check the credit and personal references of applicants.
It may also involve interviewing applicants to obtain the necessary information. From this insight, a loan processor also makes a judgement on the value of customer collateral that should be held as loan security. Once this full evaluation has taken place, loan processors submit recommended applications for underwriting approval.
Loan processors need to have strong administration and written communications skills, as the preparation of the loan documentation falls within their remit. They must produce and compile all the necessary documents for loan closings - including title abstracts, legal documents and insurance forms. Loan processors are responsible for ensuring the correct property or mortgage insurance policies are taken out to ensure protection against loss.
The loan processor is responsible for the accuracy of these documents and needs to ensure all relevant details have been included. They are also responsible for filing and maintaining digital loan records.
A loan processor is also there to guide the applicant through the process, assisting them in completing their application, conveying the outcome, and presenting the loan and repayment schedule. They must be on hand to answer questions and advise customers regarding their loans and transactions.
Once a loan has been issued, loan processors are responsible for reviewing customer accounts to ensure payments are made on time and that all other terms of the loan are being met. Processors establish credit limits and can also grant extensions of credit on overdue accounts.
At the other end of the loan timeline, loan processors also schedule and conduct closings of mortgage transactions.
Skills to look for in a loan processor
A loan processor will need to possess certain skills to perform daily tasks to a high standard. It is important to ensure any prospective employee has what it takes to fulfil their responsibilities and thrive in the workplace. The key skills for loan processors are:
Communication: loan processing is a customer-facing as well as administrative role. Active listening, a personable manner and a helpful service mindset are therefore vital. Loan processors need to be good verbal communicators, able to convey information clearly and effectively.
Reading and Writing Comprehension: loan processors are responsible for the completion of the documentation required for each loan, so they need to be able to communicate effectively in written form. They'll also need to review documents quickly and accurately, to ensure no mistakes are made.
Critical Thinking: the role requires the employment of judgement and decision-making on a daily basis. Loan processors need to be able to use the evidence available and their own logic to weigh the risk and determine whether an application should be approved or denied.
Organisation and Attention to Detail: to carry out the administrative side of the role effectively, loan processors need strong organisational skills. Strong attention to detail is essential for reviewing loan applications and preparing closing paperwork.
Software Skills: a loan processor will likely need to use software such as Microsoft Office (including Outlook, Excel, PowerPoint and Word), Customer Relationship Management (CRM) software and financial analysis software to communicate with customers, log applications, review loans and update records.
Useful abilities for a loan processor
Certain abilities will increase a loan processor's competency in their role. The abilities to look for when hiring a loan processor include:
Mathematical Aptitude: strong mathematical skills will greatly assist a loan processor in conducting their tasks. They need to determine collateral amounts, present repayment schedules and calculate, review and correct any errors regarding interest, principal loan payment and closing costs.
Oral Comprehension: linked to the communication skills above, a loan processor needs a strong oral comprehension ability to listen to and understand the information provided by loan applicants during an interview. They need to be able to capture salient information and incorporate it into the loan evaluation process.
Problem Solving: the same skills used for problem-solving, such as careful yet efficient evaluation and decision making, are vital when working as a loan processor. Each application needs to be assessed and the terms of the issue settled upon for each unique situation.
Teamwork: loan processors most often work as part of a larger team, so collaborative working skills are a must. Employees that can work well alongside colleagues will be a welcome addition to any established team, fitting seamlessly into current ways of operating and working.
Which soft skills tests could I use to hire a loan processor?
Pre-employment psychometric testing is an excellent way to both efficiently and effectively assess your candidate pool. When hiring a loan processor, the following soft skills tests could be used to assess capability:
Accountability Test: an accountability test is designed to assess how likely a candidate is to display discipline, ownership and integrity at work. During the test, candidates will be presented with a series of hypothetical scenarios and asked to select the answer option which, in their opinion, is either most or least likely to resolve the issue. As loan processors deal with financial transactions for large amounts of money, you'll want to know that the person you come to hire is honest and accountable.
Communication Skills Test: loan processors need both strong oral communication skills and the ability to convey information through written forms and reports. A communication skills test explores written and spoken communication skills, including the ability to listen actively and respond to non-verbal cues. The test is useful for determining whether a candidate has the skills needed to listen attentively and incorporate other opinions, display understanding and empathy, and convey information clearly and succinctly when required.
Decision-Making Test: evaluating loan applications requires excellent evaluative and decision-making skills. A decision-making skills test assesses a candidate's ability to approach a decision logically and to think critically - considering all the given information - when coming to conclusions and making judgements regarding loans.
Which technical or aptitude tests could I use to hire a loan processor?
When recruiting for a loan processor position, you'll want to know that your chosen candidate has the aptitude and technical skills needed to excel in performing everyday tasks.
Consider using the following tests to assess ability:
Numerical reasoning: a numerical reasoning test assesses the ability to interpret data and handle numbers. The test involves mathematical concepts such as ratios, fractions and percentages and data presented in graphs, tables and charts. Loan processors deal with numbers on a daily basis, so this test is useful for evaluating their comfort level when it comes to calculations.
Logical reasoning: a logical reasoning test assesses the ability to think critically and approach problems logically. It uses spatial data - with candidates required to select the next figure in a sequence made up of shapes and symbols. Loan processors need to be adept problem solvers and decision-makers, so this test provides valuable insight.
Microsoft Word: this skills test assesses a candidate on their current level of proficiency using Word, so the recruitment team can see if their competency meets the required level.
Microsoft Excel: this test assesses a candidate's ability to use Excel and perform all the functions needed for daily tasks.
Error checking: loan processors are required to compile financial documentation relating to each loan. It is essential that this paperwork is accurate and free from errors, however small. An error checking test requires a candidate to spot the discrepancies between sets of the given information, assessing their attention to detail whilst working under time pressure.
Our recommended test battery for a loan processor
To recruit a loan processor, we'd recommend using the following pre-employment tests within your hiring process. These assessments will ensure that the candidates best suited for the role advance to your assessment centre and interview stages.
At a minimum, we recommend that you set your candidates the following tests:
Numerical Reasoning: loan processors work with financial data on a daily basis, therefore a good level of mathematical ability is essential. A numerical reasoning test can help you determine which candidates have the numerical skills required.
Error Checking: attention to detail regarding financial documents is vital. Whether it's when reviewing applications or preparing closing paperwork, a loan processor's work needs to be accurate. Use an error-checking test to assess this capability within your talent pool.
Communication Skills Test: the communication test is useful to assess a loan processor as they typically work in teams and need strong communication with clients and partners.
Problem-Solving: problems might arise during a loan processor's typical work day. A problem-solving skill test can help assess how a candidate might deal with problems and solve them under pressure.
To find out more about recruiting for this type of role, view our loan processor test.