how a loan production office works
located on the bank s premises or at another location the loan production office reviews and process loan applications checking for underwriting standard compliance and completeness of documents it most often deals with residential mortgages but services other sorts of loans as well an lpo processor or underwriter performs these support duties the receipt collection distribution and analysis of information required for the processing or underwriting of a loan also the lpo processor communicates with applicants to obtain the information necessary for these activities other roles in an lpo include loan production leader loan specialist operations supervisor and customer service coordinator an lpo can provide clients with educational information about mortgages and loans either proprietary materials from its parent bank or general ones from a government agency however lpo processors may not offer or negotiate loan rates or terms nor may they counsel consumers about residential mortgage loan rates or terms once it has finished gathering and analyzing all the data the loan production office then forwards the application to the bank itself for a final decision the senior processor of the lpo may recommend the approval of an application but the actual decision should be from the home office or a branch if the loan is approved the lpo may also be in charge of delivering the bank s check or funds to the borrower or their account a loan production office can only act in a branch capacity providing full loan servicing if the bank successfully petitions the state banking commissioner for permission special considerations for loan production officebecause it is not a full branch of the bank the loan production office is not required to post federal deposit insurance corporation fdic or availability of funds and collection of checks regulation cc policies or signage however the office should display an equal housing lender poster which is a requirement wherever deposits are received or loans made lpo vs loan serviceralthough they both provide financing support services an lpo is not the same as a loan servicer in act the two operate at different ends of the process lpos may only administer the process from application to disbursement of a loan in contrast from the time the proceeds of a loan are dispersed until the loan is paid off the loan servicer administers it the confusion often arises because loans are often serviced nowadays by third parties separate from the institution that issued them traditionally loan servicing was a core function carried out by and housed within banks today the duties may be done by a non bank entity specializing in loan servicing or a sub servicer who operates as a third party vendor for lending institutions 