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Mortgage Glossary

AI and automation

AI agent (in lending)

Software that is given a goal, such as clearing a condition, and carries out the steps to reach it: reading documents, using the lender's systems, contacting the parties involved and recording what it did. It differs from earlier automation, which followed fixed scripts and stopped when a case did not fit.

Also called: mortgage AI agents, agentic AI in lending

Why it matters. Mortgage files rarely follow the script. An approach that can handle the exceptions, and knows when to hand one to a person, is what separates automation that removes work from automation that only moves it.

How Sonar handles it. Sonar Apex includes AI agents for loan officer support, processing, underwriting, closing and compliance, all working inside your guidelines with a person making the final decisions.

Related: AI loan processing, AI mortgage underwriting, Human in the loop, AI audit trail, Mortgage automation

A record of every action an AI system took on a loan file: what it read, what it concluded, what it changed and why. It lets a lender's compliance team, investors and regulators review AI work the same way they would review a person's.

Also called: AI explainability in lending, AI auditability

Why it matters. If a lender cannot show how a conclusion was reached, it cannot defend the loan in a quality control review, a repurchase dispute or an exam. Auditability is the first thing a bank's risk team asks about.

How Sonar handles it. Everything Sonar's AI does on a file is logged with the file, so your compliance team can review exactly what was done and why.

Related: Human in the loop, Quality control (QC), Third-party risk management, Fair lending

The use of artificial intelligence to do the work of a loan processor: identifying what a file is missing, requesting and reviewing documents, ordering third-party reports, and clearing conditions. The processor's role shifts from doing each task to reviewing the work and handling exceptions.

Also called: AI mortgage processing, automated loan processing

Why it matters. Processing is where loans wait. Every request, follow-up and document check is a small task, and a file has dozens of them. When AI handles them as they arise, files stop sitting in queues and a processor can carry a much larger pipeline.

How Sonar handles it. Sonar Apex builds the list of everything a loan needs to close, requests what is missing, checks what comes back, and sends your processors only what needs a person.

Related: Processing, Conditions, Verifications (VOE, VOI, VOA), AI agent (in lending), Cycle time

The use of artificial intelligence to do the analytical work of underwriting a mortgage: reading the file, calculating income, reviewing assets and credit, checking the loan against program guidelines, and drafting the conditions. A human underwriter reviews the result and makes the credit decision. It differs from an automated underwriting system, which scores data the lender has already entered and does not read documents.

Also called: AI underwriting, automated mortgage underwriting with AI

Why it matters. Underwriters are the scarcest and most expensive people in a mortgage operation, and most of their day goes to reading and calculating, not deciding. Moving that work to AI lets the same underwriters decide far more loans, and it makes every file get the same level of scrutiny.

How Sonar handles it. Sonar Apex reads every document in the file, underwrites the loan to the program guidelines, and hands your underwriter a complete underwrite with conditions to review and sign.

Related: Underwriting, Automated underwriting system (AUS), Income calculation, Human in the loop, Conditions

A system design in which AI does the work and a person reviews and approves it before it takes effect. In lending it means the AI prepares the underwrite and works the file, and a person makes the credit decision.

Also called: HITL, human oversight of AI

Why it matters. Lenders stay legally responsible for every credit decision, whatever tools they use. Keeping a person in the decision is what makes AI acceptable to investors, regulators and a lender's own risk committee.

How Sonar handles it. With Sonar, people make the final decision on every underwrite and every credit decision, no matter what.

Related: AI audit trail, AI mortgage underwriting, Fair lending, Adverse action notice

Working out a borrower's qualifying monthly income from pay stubs, W-2s, tax returns and other documents under the rules of the loan program. It is one of the most time-consuming and error-prone parts of underwriting, especially for borrowers with variable or self-employment income.

Also called: mortgage income analysis, qualifying income

Why it matters. Income errors are a leading cause of loan defects and repurchase demands. The calculation rules differ by program and by income type, so consistency across underwriters is hard to achieve by hand.

How Sonar handles it. Sonar Apex calculates income from the source documents under the program's rules and shows its work, so your underwriter can check the reasoning and not redo the arithmetic.

Related: Self-employed income analysis, AI mortgage underwriting, Rental income, Repurchase, Quality control (QC)

Technology that identifies what each document in a loan file is, extracts the data in it, and checks that data against the application. It replaces manual indexing and data entry, and it is the foundation for automating the rest of the file.

Also called: mortgage document automation, IDP, mortgage OCR

Why it matters. A loan file can run to hundreds of pages in every format a borrower can produce. Until those pages are turned into reliable data, nothing downstream can be automated, and errors made here surface later as conditions, delays or defects.

How Sonar handles it. Sonar Apex reads and classifies every document as it arrives and checks it against the application, so the file is ready to underwrite without manual indexing.

Related: AI loan processing, Income calculation, Uniform Residential Loan Application (Form 1003), Verifications (VOE, VOI, VOA)

The use of software to perform steps in originating a mortgage without a person doing them by hand. It ranges from rules-based tasks, such as ordering a credit report when an application arrives, to AI that reads documents and works conditions.

Also called: mortgage process automation, lending automation

Why it matters. Most lenders already have the rules-based kind and still carry large back offices, because the expensive work is reading, judging and chasing, which rules cannot do. The gains now come from automating that work.

How Sonar handles it. Sonar Apex automates the file work itself, from reading documents to clearing conditions, on top of the loan origination system you already run.

Related: AI loan processing, AI mortgage underwriting, Straight-through processing, Loan origination system (LOS), Cost to originate

The calculation of qualifying income for a borrower who owns a business, working from personal and business tax returns. The underwriter adjusts reported income for items such as depreciation and one-time losses and assesses whether the business can sustain it.

Also called: self-employed borrower income, cash flow analysis

Why it matters. These are the files that take an underwriter hours and that many junior underwriters cannot do. They are also a growing share of applications, and the reason many borrowers end up in bank statement or other non-QM loans.

How Sonar handles it. Sonar Apex works through personal and business returns, makes the standard adjustments, and lays out the analysis for your underwriter to review.

Related: Income calculation, Bank statement loan, Non-QM loan, AI mortgage underwriting

Moving a loan, or a step in a loan, from start to finish without manual handling. In mortgages it is achieved piece by piece, since most files contain something that needs a person's judgment.

Also called: touchless mortgage, STP

Why it matters. The useful question is not whether a whole loan can close untouched, but what share of the steps in a file can. Each step that completes without waiting for a person takes time out of the loan.

How Sonar handles it. Sonar Apex completes the steps that need no judgment as they come up and routes the rest to the right person with the context attached.

Related: Mortgage automation, Cycle time, AI agent (in lending)

Operations as a service

A service model in which a provider runs a lender's processing, underwriting and closing using AI to do most of the file work, with experienced mortgage staff handling the parts that need judgment. It differs from traditional outsourcing, which substitutes cheaper labor, and from software, which the lender has to staff and run itself.

Also called: AI mortgage operations, AI mortgage fulfillment

Why it matters. It changes the economics in a way the other two options do not: cost per loan falls because less human time goes into each file, and it moves with volume because the capacity is not headcount.

How Sonar handles it. This is what SonarOps is. Our goal is to make your mortgage business a profit center and take the back office off your hands.

Related: Mortgage fulfillment, Mortgage process outsourcing, Lending as a service, Mortgage cyclicality

Loan processing performed by a third party on a lender's or broker's behalf. It gives an originator processing capacity without hiring, and is usually priced per file. In many states, independent contract processors must be licensed.

Also called: contract processor, third-party processing, outsourced loan processing

Why it matters. Processing demand swings with volume more than any other role. Contract processing turns a fixed salary into a per-loan cost, which is why brokers and smaller lenders have long relied on it.

How Sonar handles it. SonarOps can take on processing alone or together with underwriting and closing.

Related: Processing, Contract underwriting, AI loan processing, Mortgage fulfillment

Underwriting performed by a third party on a lender's behalf, to the lender's or its investors' guidelines. Lenders use it to add capacity when volume rises or to cover loan types their own staff rarely see. Mortgage insurers have long offered it alongside their insurance.

Also called: outsourced underwriting, third-party underwriting

Why it matters. Underwriting capacity is the hardest thing to add quickly, because experienced underwriters are scarce exactly when every lender wants them. Contract underwriting is the traditional pressure valve.

How Sonar handles it. SonarOps can take on underwriting alone or together with processing and closing, across every type of mortgage.

Related: Underwriting, Contract processing, Mortgage fulfillment, AI mortgage underwriting

An arrangement in which a provider supplies the technology and the operations needed to offer a loan product, and the institution supplies the customers, the brand and the capital. It lets a bank or credit union offer mortgages without building the operation behind them.

Also called: mortgage as a service, LaaS

Why it matters. Many institutions want to offer mortgages to keep their customers but cannot justify building and staffing a full operation for the volume they have. Lending as a service lets them offer the product at a cost that scales with what they close.

How Sonar handles it. SonarOps provides the technology and the operations, and your institution keeps the customer, the brand and the credit policy.

Related: Private-label mortgage, Mortgage fulfillment, AI-powered mortgage operations

The staff and systems that turn an application into a closed loan: processors, underwriters, closers, post-closing and quality control. It is where most of a lender's cost per loan, other than sales compensation, sits.

Also called: mortgage operations, loan operations

Why it matters. The back office is a fixed cost serving a volatile business. It is sized for a volume that rarely holds, so lenders are either short of capacity or paying for people they do not need.

How Sonar handles it. Sonar Apex makes your back office faster. SonarOps runs it for you.

Related: Mortgage fulfillment, Cost to originate, Loans per employee, Mortgage cyclicality

Everything that happens to a loan between application and funding: processing, underwriting, closing, and often post-closing. A lender can run fulfillment with its own staff or have a third party run it, in which case the lender keeps the borrower relationship and the credit policy while the provider does the work.

Also called: mortgage fulfillment services, loan fulfillment, outsourced mortgage fulfillment

Why it matters. Fulfillment is where most of the non-sales cost of a loan sits, and it is the part that has to be staffed up and down as volume moves. For a bank or credit union, it is often the difference between a mortgage business that makes money and one that does not.

How Sonar handles it. SonarOps runs fulfillment for banks and credit unions: processing, underwriting and closing, done with AI and experienced mortgage staff, under your brand and to your guidelines.

Related: Mortgage process outsourcing, AI-powered mortgage operations, Mortgage back office, Contract underwriting, Cost to originate

Having a third party perform some or all of a lender's back-office work, such as processing, underwriting support, closing and post-closing. Traditionally it has meant moving the work to lower-cost staff, often offshore, and paying per task or per hour.

Also called: outsourced mortgage processing, mortgage BPO, mortgage outsourcing

Why it matters. Outsourcing lowers the cost of each hour but does not change how many hours a loan takes, and it adds handoffs. Lenders considering it should ask what happens to cycle time, quality and data security, and whether cost really falls when volume does.

How Sonar handles it. SonarOps takes a different route to the same goal: most of the file work is done by AI, with experienced mortgage staff on the parts that need judgment.

Related: Mortgage fulfillment, AI-powered mortgage operations, Contract processing, Third-party risk management, Data residency

A mortgage offered under a bank's or credit union's own brand while another company does the origination work behind the scenes. The borrower deals with the institution's name throughout.

Also called: white-label mortgage, private label origination

Why it matters. It lets an institution keep the customer relationship on its most important loan without carrying the operation. The quality of the borrower's experience depends entirely on the provider, so it deserves close attention in selection.

How Sonar handles it. SonarOps works under your brand from application to closing.

Related: Lending as a service, Mortgage fulfillment, Third-party risk management

Economics of lending

The total expense of producing one mortgage, including sales commissions, staff compensation, occupancy, technology and corporate overhead. The Mortgage Bankers Association reports it quarterly; in the first quarter of 2026 it averaged $11,898 per loan. Because much of it is staff, it rises when volume falls and the same people produce fewer loans.

Also called: loan production expense, cost per loan, mortgage origination cost

Why it matters. It is the number that decides whether a mortgage business makes money. Revenue per loan is largely set by the market, so cost is the side a lender can control.

How Sonar handles it. Both Sonar products go after the staff cost inside this number: Apex by letting your team handle more loans, SonarOps by taking the back office off your payroll.

Related: Net production income, Loans per employee, Mortgage back office, Mortgage cyclicality

The number of days from application to closing. It is the measure borrowers and real estate agents feel most directly. Most of it is waiting: for documents, for third-party reports, and for someone to pick up the file.

Also called: turn time, application to close, time to close

Why it matters. Shorter cycle times win purchase business, improve pull-through and reduce the cost of rate locks. Since most of the time is waiting, the way to shorten it is to remove the queues, not to make people work faster.

How Sonar handles it. With Sonar, files are read, underwritten and conditioned as they arrive, not when someone gets to them.

Related: Pull-through rate, Conditions, Clear to close, Straight-through processing

The number of loans a lender closes per production employee per month, the standard measure of operational productivity. It falls sharply when volume drops faster than headcount.

Also called: mortgage productivity, closings per FTE

Why it matters. It is the clearest single measure of how efficient an operation is, and the one that software and AI investments should move. If a tool does not raise it, it has not removed work.

How Sonar handles it. Sonar Apex is designed to raise this number by taking the file work off your processors and underwriters.

Related: Cost to originate, Cycle time, Mortgage back office

The tendency of mortgage volume to rise and fall sharply with interest rates. Lenders hire when rates drop and refinances surge, then cut staff when rates rise, which makes staffing the central operating problem in the business.

Also called: mortgage market cycles, refi boom staffing

Why it matters. A lender that staffs for the peak loses money in the trough, and one that staffs for the trough cannot serve the peak. The cycle of hiring and layoffs is expensive, slow and damaging to the people involved.

How Sonar handles it. With SonarOps, your mortgage cost rises and falls with the loans you close, and you stop hiring and laying off with every rate cycle.

Related: Cost to originate, Mortgage back office, Loans per employee, AI-powered mortgage operations

What a lender earns on originating a loan after all production costs, usually expressed per loan or in basis points of the loan amount. The Mortgage Bankers Association reported an average of $727 per loan in the first quarter of 2026.

Also called: mortgage production profit, profit per loan

Why it matters. Margins this thin mean small changes in cost per loan decide whether origination is profitable at all. In weak quarters the industry average has been negative.

How Sonar handles it. SonarOps is built around one goal: making your mortgage business a profit center.

Related: Cost to originate, Loans per employee, Pull-through rate

The share of applications, or of locked loans, that go on to close. Slow processing lowers it, because borrowers who wait go elsewhere.

Also called: loan pull-through, fallout rate

Why it matters. Every application that falls out has already cost money to acquire and work. Raising pull-through lowers the cost of every closed loan without any new marketing.

Related: Cycle time, Cost to originate, Net production income

The loan process

The underwriter's check that an appraisal is complete, supports the value, and meets the program's and the agencies' requirements.

Also called: appraisal underwriting, collateral review

Why it matters. A value that does not hold up is one of the most common reasons a deal has to be restructured late. Catching appraisal problems early protects both the closing date and the lender.

Related: Underwriting, Loan-to-value (LTV), Condo project review

Software that evaluates a loan application against an agency's or investor's guidelines and returns a recommendation with a list of findings the lender must satisfy. Fannie Mae's AUS is Desktop Underwriter and Freddie Mac's is Loan Product Advisor. An AUS recommendation is not an approval: an underwriter still has to validate the data behind it.

Also called: AUS, automated underwriting

Why it matters. The AUS is only as good as the data entered into it. If the income or assets in the system do not match the documents, the recommendation is worthless, and finding that out late is expensive.

How Sonar handles it. An AUS scores the data it is given. Sonar Apex does the work before and after it: reading the documents, validating the data, and working the findings.

Related: Desktop Underwriter (DU), Loan Product Advisor (LPA), AI mortgage underwriting, Underwriting

The Credit Alert Verification Reporting System, a federal database of borrowers who have defaulted or are delinquent on federal debt. Lenders must check it for every applicant on an FHA, VA or USDA loan.

Also called: CAVIRS, Credit Alert System

Why it matters. A missed check makes a government loan uninsurable. It is a small task that has to happen on every file, which is the kind of step that gets skipped under volume.

Related: FHA loan, VA loan, USDA loan, FHA case number

The point at which the underwriter has signed off on every condition and the loan can be scheduled for closing.

Also called: CTC, cleared to close

Why it matters. It is the milestone every party to the transaction is waiting for. The time from application to clear to close is the part of cycle time the lender controls most.

Related: Conditions, Closing Disclosure, Closing, Cycle time

The stage in which final loan documents are prepared, signed and funded. The closer coordinates the lender, the title or settlement agent and the borrower, and makes sure the final figures match what was disclosed.

Also called: mortgage closing, loan closing, funding

Why it matters. Closing is unforgiving of errors: a wrong figure or missing document on the day means a delayed move for a family and a failed commitment for the lender.

How Sonar handles it. Sonar Apex assembles closing packages for your closers to review. With SonarOps, we run closing for you.

Related: Closing Disclosure, Clear to close, Post-closing, Title insurance

The five-page statement of a loan's final terms and costs, created by the TRID rule. The borrower must receive it at least three business days before closing.

Also called: CD

Why it matters. The three-day wait cannot be shortened, and certain changes restart it. A late or incorrect Closing Disclosure is one of the most common reasons closings slip.

Related: TRID, Loan Estimate, Closing, Clear to close

An underwriter's decision that a loan can be approved once a listed set of conditions is met. It is the most common first decision on a file.

Also called: conditional loan approval

Why it matters. The length and clarity of the conditions list determines how much work remains. A thorough first underwrite produces one complete list, where a rushed one produces new conditions every time the file comes back.

Related: Conditions, Underwriting, Clear to close

The items an underwriter requires before a loan can move forward, such as an updated bank statement, a letter of explanation or proof of insurance. They are grouped by when they are due: before closing documents are drawn, or before funding.

Also called: underwriting conditions, loan conditions, prior-to-doc conditions

Why it matters. Clearing conditions is the bulk of a processor's work and the main reason loans sit. Each one means asking the borrower or a third party for something, waiting, checking what comes back, and sending it to the underwriter.

How Sonar handles it. Sonar Apex builds the conditions list from the underwrite, requests what is missing, reviews what comes back against the guideline, and sends your team only what needs a person's judgment.

Related: Conditional approval, Clear to close, Processing, AI loan processing

The lender's assessment of a condominium project, beyond the individual unit, to confirm it meets agency requirements for things such as owner occupancy, reserves, insurance and litigation. Projects that pass are called warrantable. Those that do not need a portfolio or non-QM loan.

Also called: condo warrantability, condo questionnaire, warrantable condo

Why it matters. It depends on documents from the homeowners association, which arrive slowly and in no standard form. Agency requirements have tightened in recent years, making it a frequent cause of late surprises.

Related: Appraisal review, Portfolio loan, Non-QM loan, Underwriting

Fannie Mae's automated underwriting system. It evaluates a loan against Fannie Mae's guidelines and returns a recommendation, such as Approve/Eligible, along with the findings the lender must document.

Also called: DU, Fannie Mae DU

Why it matters. Each finding becomes work for a processor or underwriter. How quickly and accurately a lender satisfies DU findings drives much of its cycle time on conventional loans.

Related: Automated underwriting system (AUS), Loan Product Advisor (LPA), Fannie Mae (FNMA), Conditions

The identifier FHA assigns to a loan when the lender registers it. The appraisal and the mortgage insurance are tied to it, and it follows the loan through origination and servicing.

Why it matters. Case numbers expire and appraisals are attached to them, so handling them wrongly can force a new appraisal or delay insuring the loan.

Related: FHA loan, HUD Handbook 4000.1, CAIVRS

The package of documents a lender must send shortly after receiving an application, led by the Loan Estimate, which is due within three business days. Errors or delays here create compliance problems that follow the loan to closing.

Also called: mortgage disclosures, upfront disclosures

Why it matters. The three-day clock starts whether or not the lender is ready. Fee errors at this stage limit what can be charged at closing, so mistakes cost real money.

Related: Loan Estimate, TRID, Closing Disclosure

The three-page disclosure of a loan's estimated rate, payment and closing costs that a lender must deliver within three business days of receiving an application. It was created by the TRID rule.

Also called: LE, official loan estimate

Why it matters. Many of the fees on it can increase only within set limits before closing. An inaccurate Loan Estimate means the lender absorbs the difference.

Related: TRID, Initial disclosures, Closing Disclosure, Regulation Z

The system of record a lender uses to take a loan from application through closing: application data, documents, disclosures, underwriting decisions and closing packages all live there.

Also called: LOS, mortgage LOS, loan origination software

Why it matters. Replacing an LOS is one of the most disruptive projects a lender can take on, which is why most lenders want new capabilities added on top of the one they have.

How Sonar handles it. Sonar Apex runs as a complete system or on top of any LOS that has an API.

Related: LOS integration, Point of sale (POS), Mortgage automation, MISMO

Freddie Mac's automated underwriting system, formerly called Loan Prospector. It evaluates a loan against Freddie Mac's guidelines and returns a risk class of Accept or Caution with feedback the lender must address.

Also called: LPA, Loan Prospector, LP

Why it matters. Lenders often run a loan through both agencies' systems to find the better execution, which means satisfying two sets of requirements.

Related: Automated underwriting system (AUS), Desktop Underwriter (DU), Freddie Mac (FHLMC)

The work of creating a new loan, from taking the application through processing, underwriting and closing to funding.

Also called: loan origination, mortgage origination

Why it matters. Origination is a chain of handoffs between people and systems, and most of the cost and delay in a mortgage comes from those handoffs.

How Sonar handles it. Sonar automates lending end to end, across every step of origination.

Related: Processing, Underwriting, Closing, Loan origination system (LOS)

The borrower-facing software where a mortgage application is started, documents are uploaded and status is tracked. It feeds the loan origination system.

Also called: mortgage POS, digital mortgage application

Why it matters. It sets the borrower's first impression and determines how clean the data is when the file reaches operations. A good one reduces the back-and-forth that slows every later step.

How Sonar handles it. Sonar Apex includes a point of sale, or works with the one you already have.

Related: Loan origination system (LOS), Uniform Residential Loan Application (Form 1003), LOS integration

The work done after a loan funds: checking the signed package, collecting documents that arrive later, such as the recorded mortgage and the final title policy, and delivering the loan to the investor that buys it.

Also called: post-close, loan delivery, trailing documents

Why it matters. A loan is not revenue until the investor buys it. Missing or defective documents delay that sale and tie up the lender's funding lines.

Related: Closing, Quality control (QC), Repurchase, Correspondent lending

The stage of origination in which the loan file is assembled and verified: collecting documents from the borrower, ordering third-party reports, checking the file against guidelines, and clearing conditions so the loan can close.

Also called: loan processing, mortgage processing

Why it matters. Processing is the longest stage of most loans and the one most exposed to volume swings. It is made up of many small tasks, which is what makes it well suited to AI.

How Sonar handles it. Sonar Apex does the work of processing alongside your team. SonarOps does it for you.

Related: AI loan processing, Conditions, Contract processing, Verifications (VOE, VOI, VOA)

A lender's program for checking that its loans were originated according to guidelines and regulations. It has two parts: reviews of a sample of loans before funding, and reviews of a sample after closing. Fannie Mae, Freddie Mac and the government agencies all require it.

Also called: mortgage QC, prefunding QC, post-closing QC, loan quality control

Why it matters. QC is how a lender finds its own defects before an investor does. Because it samples, it can only estimate quality, which is one argument for tools that check every file the same way.

How Sonar handles it. Sonar's AI checks every file against the guidelines, not a sample, and logs what it did for your QC team to review.

Related: Repurchase, AI audit trail, Income calculation, Post-closing

An investor's demand that a lender buy back a loan it sold because the loan did not meet the guidelines it was sold under. Repurchases are costly, and avoiding the defects that cause them is the purpose of quality control.

Also called: loan buyback, repurchase demand, mortgage buyback

Why it matters. A single repurchase can erase the profit on dozens of good loans. Most stem from a small set of causes, led by income and employment errors and undisclosed debts.

Related: Quality control (QC), Income calculation, Fannie Mae (FNMA), Freddie Mac (FHLMC)

The evaluation of a loan file against program guidelines to decide whether the loan can be approved. The underwriter reviews credit, income, assets and the property, and issues an approval with the conditions that must be met before closing.

Also called: mortgage underwriting, loan underwriting

Why it matters. Underwriting is the decision point of the loan and the lender's main defense against defects. It is also the hardest role to staff, since experienced underwriters are scarce when volume is high.

How Sonar handles it. Sonar Apex prepares the complete underwrite and your underwriter reviews and signs it. With SonarOps, we run underwriting to your guidelines.

Related: AI mortgage underwriting, Conditional approval, Conditions, Contract underwriting

The standard application used for nearly all US home loans, published by Fannie Mae and Freddie Mac. It collects the borrower's income, assets, debts and property details, and its data format is the starting point for every system that touches the loan.

Also called: URLA, 1003, Form 1003

Why it matters. Everything in the file is checked back against what the borrower stated here. Discrepancies between the application and the documents are the source of many conditions.

How Sonar handles it. Sonar Apex checks every document against the application and flags what does not match.

Related: Point of sale (POS), Intelligent document processing, MISMO, Initial disclosures

Confirmation, from a source other than the borrower, of employment, income and assets. They are obtained from employers, payroll and bank data services, or directly from financial institutions, and employment is typically re-verified just before closing.

Also called: verification of employment, VOE, VOI, VOA

Why it matters. Verifications are a common source of delay, since they depend on third parties, and of cost, since data services charge for each one. Ordering the right one at the right time matters.

Related: Processing, Income calculation, Conditions, Closing

Loan types and programs

An FHA-insured loan that finances the purchase or refinance of a home and the cost of renovating it in a single mortgage. It comes in a Limited version for smaller repairs and a Standard version for major work, which requires a HUD consultant.

Also called: FHA 203k, renovation loan

Why it matters. It adds contractors, bids, draw schedules and inspections to an ordinary loan file, so it takes far more coordination than a standard FHA loan.

Related: FHA loan, HUD Handbook 4000.1

A non-QM loan that qualifies a self-employed borrower using 12 to 24 months of bank deposits in place of tax returns. The underwriter has to analyze every statement to separate business income from transfers and one-time deposits.

Also called: bank statement mortgage, alt doc loan

Why it matters. Reviewing two years of statements line by line is hours of work per file, and it is exactly the kind of reading and classifying that AI does well.

How Sonar handles it. Sonar Apex reads every statement, classifies the deposits, and lays out the income calculation for your underwriter to review.

Related: Non-QM loan, Self-employed income analysis, Income calculation

A refinance in which the new loan is larger than the existing one and the borrower takes the difference in cash. Each program caps the loan-to-value ratio and sets how long the borrower must have owned the property first.

Also called: cash out refi

Why it matters. The ownership and seasoning rules differ by program and change from time to time, so they are a common source of loans that turn out to be ineligible late in the process.

Related: Delayed financing, Loan-to-value (LTV), Texas 50(a)(6) loan

A conventional loan that meets Fannie Mae's and Freddie Mac's requirements, including the maximum loan amount set each year by the Federal Housing Finance Agency.

Also called: conforming mortgage, conforming loan limit

Why it matters. Conforming loans are the most liquid and most standardized product, which makes them the most competitive on price and the most sensitive to a lender's cost per loan.

How Sonar handles it. Sonar handles every type of mortgage, including this one, with Apex or SonarOps.

Related: Conventional loan, Jumbo loan, Loan-level price adjustments (LLPAs)

A mortgage that is not insured or guaranteed by a government agency. Most are underwritten to Fannie Mae or Freddie Mac guidelines so they can be sold to them.

Also called: conventional mortgage

Why it matters. Conventional loans are the largest share of the market, so the speed and accuracy with which a lender works agency guidelines sets the baseline for its whole operation.

How Sonar handles it. Sonar handles every type of mortgage, including this one, with Apex or SonarOps.

Related: Conforming loan, Fannie Mae (FNMA), Freddie Mac (FHLMC), Private mortgage insurance (PMI)

An exception that lets a buyer who paid cash for a home take out a cash-out refinance within six months of the purchase, recovering the cash while keeping the advantages of a cash offer.

Why it matters. It has its own documentation requirements, including proof of where the purchase cash came from.

Related: Cash-out refinance, Conventional loan

A loan on an investment property that qualifies on the property's income and not the borrower's. DSCR stands for debt service coverage ratio: the property's rent divided by its mortgage payment, taxes and insurance.

Also called: debt service coverage ratio loan, investor loan

Why it matters. DSCR lending has grown quickly with investor demand. The underwriting is lighter on the borrower and heavier on the property, leases and rent support.

How Sonar handles it. Sonar handles every type of mortgage, including this one, with Apex or SonarOps.

Related: Non-QM loan, Rental income, Portfolio loan

A mortgage insured by the Federal Housing Administration and made by an FHA-approved lender. FHA loans allow lower down payments and credit scores than most conventional loans, and they carry mortgage insurance premiums for the borrower.

Also called: FHA mortgage

Why it matters. FHA has its own handbook, its own appraisal rules and its own insuring process after closing. Lenders that do FHA occasionally tend to make the errors that lenders who do it daily avoid.

How Sonar handles it. Sonar handles every type of mortgage, including this one, with Apex or SonarOps.

Related: HUD Handbook 4000.1, Mortgage insurance premium (MIP), FHA case number, 203(k) loan

A home equity line of credit: a revolving line secured by the home, which the borrower can draw on and repay during a set draw period. It is usually a second lien behind the first mortgage.

Also called: home equity line of credit

Why it matters. HELOC demand rises when rates are high and owners do not want to give up a low first mortgage. Banks and credit unions want to offer them quickly, which makes the cost and speed of production matter.

How Sonar handles it. Sonar handles every type of mortgage, including this one, with Apex or SonarOps.

Related: Home equity loan, HCLTV, Combined loan-to-value (CLTV)

A fixed-amount second mortgage, paid out in a lump sum and repaid over a set term. It differs from a HELOC, which is a revolving line.

Also called: closed-end second, second mortgage

Why it matters. Second mortgages are small loans, so the cost to produce them has to be low for them to be worth making.

How Sonar handles it. Sonar handles every type of mortgage, including this one, with Apex or SonarOps.

Related: HELOC, Combined loan-to-value (CLTV)

Freddie Mac's low-down-payment program for borrowers with low to moderate incomes. It allows down payments as low as 3 percent and sets an income limit based on the area median income.

Why it matters. Like HomeReady, it turns on an income limit that varies by location, and the two programs differ in details that affect which one fits a given borrower.

Related: HomeReady, Freddie Mac (FHLMC), Conventional loan

Fannie Mae's low-down-payment program for borrowers with low to moderate incomes. It allows down payments as low as 3 percent and sets an income limit based on the area median income.

Why it matters. Eligibility depends on the borrower's income against a limit that varies by location, which has to be checked correctly at the start.

Related: Home Possible, Fannie Mae (FNMA), Conventional loan

A loan on which the borrower pays only interest for an initial period, after which payments rise to cover principal. Interest-only loans cannot be qualified mortgages, so they are made as non-QM or portfolio loans.

Also called: IO loan

Why it matters. They are common in jumbo and portfolio lending, and qualifying the borrower on the later, higher payment is a step that has to be done correctly.

Related: Non-QM loan, Portfolio loan, Qualified mortgage (QM)

A mortgage larger than the conforming loan limit, which means Fannie Mae and Freddie Mac cannot buy it. Jumbo loans are underwritten to the guidelines of the bank or investor that will hold them, and those guidelines vary from one to the next.

Also called: jumbo mortgage, non-conforming loan

Why it matters. With no single rulebook, underwriters have to learn each investor's requirements, and the borrowers often have complex income and assets. Jumbo files take longer and need more experienced staff.

How Sonar handles it. Sonar handles every type of mortgage, including this one, with Apex or SonarOps.

Related: Portfolio loan, Conforming loan, Self-employed income analysis, Product matrix

A loan structure in which the payment is less than the interest due, so the balance grows over time. Loans with negative amortization cannot be qualified mortgages.

Also called: neg am

Why it matters. It is rare in new lending but still appears in rules and tests every loan must pass.

Related: Qualified mortgage (QM), Interest-only loan

A mortgage that does not meet the qualified mortgage standards, usually because of how income is documented or because of a loan feature. Non-QM loans still must satisfy the ability-to-repay rule. They are underwritten by hand to each investor's guidelines, which makes them slower and more expensive to produce.

Also called: non-QM mortgage, non qualified mortgage

Why it matters. There is no automated underwriting system to lean on, and every investor's guidelines differ. Lenders that want the margin non-QM offers have to solve for the extra underwriting time it takes.

How Sonar handles it. Sonar underwrites to each investor's guidelines, so non-QM files get the same treatment as agency loans. Sonar handles every type of mortgage, including this one, with Apex or SonarOps.

Related: Bank statement loan, DSCR loan, Qualified mortgage (QM), Self-employed income analysis, Product matrix

A mortgage a bank or credit union keeps on its own balance sheet and does not sell. The institution sets its own guidelines, so it can make loans that do not fit agency rules, and each institution's guidelines are different.

Also called: portfolio mortgage, balance sheet lending

Why it matters. Portfolio lending is where banks and credit unions compete best, because they can say yes where others cannot. It only works if the people or systems underwriting the loans know the institution's own rules.

How Sonar handles it. Sonar's AI underwrites to your rules and guidelines, including the ones that exist only at your institution.

Related: Jumbo loan, Non-QM loan, Product matrix, Condo project review

A loan that meets the federal standards giving a lender legal protection under the ability-to-repay rule, which requires lenders to make a reasonable, good-faith determination that a borrower can repay. QM loans cannot have features such as interest-only payments or negative amortization, and their pricing and fees are capped.

Also called: QM, ability to repay, ATR rule

Why it matters. QM status has to be tested on every loan, and a loan that fails the points-and-fees or pricing test by a small amount loses its protection. It is a calculation that must be right every time.

Related: Non-QM loan, Regulation Z, Interest-only loan, Negative amortization

A cash-out refinance or home equity loan on a Texas homestead, governed by Section 50(a)(6) of the Texas Constitution. The rules cap the combined loan-to-value at 80 percent, limit fees, require a waiting period before closing, and restrict where the loan can close.

Also called: Texas cash-out, Texas home equity loan

Why it matters. The penalty for getting it wrong is severe, so lenders treat these loans with special care, and any process that handles them needs the rules built in.

Related: Cash-out refinance, Combined loan-to-value (CLTV), HELOC

A mortgage guaranteed by the US Department of Agriculture for homes in eligible rural areas, for borrowers under an income limit. It allows no down payment and is underwritten through USDA's own automated system.

Also called: USDA mortgage, rural development loan

Why it matters. USDA counts the income of everyone in the household for eligibility, even people not on the loan, and the agency reviews the file itself before closing, which adds a step lenders have to plan around.

How Sonar handles it. Sonar handles every type of mortgage, including this one, with Apex or SonarOps.

Related: VA loan, FHA loan, CAIVRS

A mortgage guaranteed by the Department of Veterans Affairs for eligible service members, veterans and surviving spouses. It allows no down payment and has no monthly mortgage insurance, and it has its own rules on eligibility, fees and residual income.

Also called: VA mortgage, VA home loan

Why it matters. VA underwriting uses a residual income test found nowhere else, and eligibility paperwork has its own process. Accuracy matters because the guaranty depends on it.

How Sonar handles it. Sonar handles every type of mortgage, including this one, with Apex or SonarOps.

Related: FHA loan, USDA loan, CAIVRS

Underwriting and pricing terms

Mortgage broker compensation paid directly by the borrower, as opposed to by the lender. Under the federal loan originator compensation rule, a broker cannot be paid by both the borrower and the lender on the same loan.

Also called: BPC

Why it matters. The choice has to be made and disclosed correctly at the start, because it affects the fees on the Loan Estimate and the loan's points-and-fees test.

Related: Lender-paid compensation, Wholesale lending, Regulation Z

A person who applies for a loan with the primary borrower, shares ownership of the property, and is equally responsible for repayment. A cosigner, by contrast, is responsible for the debt without having an ownership interest.

Also called: cosigner, co-applicant

Why it matters. Every borrower on the loan brings a full set of income, asset and credit documents, which multiplies the work in the file.

Related: Non-occupant co-borrower

The total of all loans secured by a property divided by the property's value. For a HELOC, CLTV counts the balance drawn. Freddie Mac calls the same ratio total loan-to-value (TLTV).

Also called: CLTV, TLTV, total loan to value

Why it matters. Any second lien changes the eligibility of the first. Missing a subordinate lien is a classic underwriting defect.

Related: Loan-to-value (LTV), HCLTV, HELOC

A sale, usually between family members, at a price below market value, where the difference is credited to the buyer as a down payment. It requires a gift letter and an appraisal supporting the value.

Why it matters. Sales between related parties get extra scrutiny and carry their own documentation rules.

Related: Seller concessions, Loan-to-value (LTV)

Home equity combined loan-to-value. The same calculation as CLTV, except that a HELOC is counted at its full credit limit and not just the amount drawn. Freddie Mac calls it HTLTV.

Also called: HTLTV, high loan to value

Why it matters. A borrower with a large unused line can pass on CLTV and fail on HCLTV, so both have to be calculated.

Related: Combined loan-to-value (CLTV), HELOC, Loan-to-value (LTV)

Mortgage broker compensation paid by the lender, typically funded through the interest rate. A broker on a lender-paid loan cannot also be paid by the borrower.

Also called: LPC

Why it matters. The broker's compensation plan with each lender is fixed in advance and cannot vary loan by loan, which limits how a deal can be restructured.

Related: Borrower-paid compensation, Wholesale lending, Regulation Z

Risk-based fees that Fannie Mae and Freddie Mac charge on a loan according to its credit score, loan-to-value ratio, occupancy, property type and other features. Freddie Mac calls its version Credit Fees. Lenders pass them through in the rate or the closing costs.

Also called: LLPA, Freddie Mac credit fees

Why it matters. A small change in a loan's facts, such as a credit score crossing a threshold, changes its price. Getting the facts right early avoids repricing later.

Related: Fannie Mae (FNMA), Freddie Mac (FHLMC), Loan-to-value (LTV), Conforming loan

The loan amount divided by the lower of the property's appraised value or purchase price. It is the main measure of how much equity protects the lender.

Also called: LTV, loan to value ratio

Why it matters. LTV drives eligibility, pricing and mortgage insurance, so a change in appraised value late in the process can change the whole loan.

Related: Combined loan-to-value (CLTV), HCLTV, Private mortgage insurance (PMI), Appraisal review

The mortgage insurance FHA charges on the loans it insures. It has two parts: an upfront premium paid at closing and an annual premium paid monthly.

Also called: MIP, FHA mortgage insurance

Why it matters. The premiums depend on the loan's term, amount and loan-to-value ratio, and they have to be calculated and disclosed exactly.

Related: Upfront mortgage insurance premium (UFMIP), FHA loan, Private mortgage insurance (PMI)

A co-borrower who is on the loan but will not live in the property, often a parent helping a child qualify. Programs limit how their income can be used.

Also called: non-occupying co-borrower

Why it matters. The limits vary by program and by loan-to-value ratio, so the structure has to be checked against the right rulebook.

Related: Co-borrower, FHA loan, Conventional loan

Interest charged by the day. At closing the borrower prepays per diem interest from the funding date to the end of the month, which is why the first full payment comes later.

Also called: odd days interest, prepaid interest

Why it matters. It changes whenever the closing date moves, so closing figures have to be recalculated each time.

Related: Closing, Closing Disclosure

A legal document authorizing one person to act for another. In a mortgage it lets someone sign closing documents on a borrower's behalf, subject to the lender's and the title company's approval.

Also called: POA

Why it matters. Programs and title companies restrict when one can be used, and approval has to be obtained before closing day, not at the table.

Related: Closing, Title insurance

Insurance that protects the lender on a conventional loan with a loan-to-value ratio above 80 percent. The borrower pays it, and federal law lets it be cancelled once enough equity is reached.

Also called: PMI, private MI

Why it matters. Mortgage insurance has to be ordered, priced and disclosed correctly, and the insurer's own guidelines can be tighter than the agencies'.

Related: Mortgage insurance premium (MIP), Loan-to-value (LTV), Conventional loan, Contract underwriting

A lender's or investor's summary of which loans it will make: the allowed combinations of loan type, occupancy, loan-to-value, credit score, loan amount and documentation.

Also called: lending matrix, eligibility matrix

Why it matters. Staff have to know many matrices, and they change often. Placing a loan with the wrong investor, or finding out late that it fits none, wastes everyone's time.

How Sonar handles it. Sonar's AI underwrites to your rules and guidelines, including each investor's matrix.

Related: Non-QM loan, Portfolio loan, Jumbo loan, Underwriting

Income from renting property, used to help a borrower qualify. It is documented with tax returns or leases, and lenders typically count only a portion of gross rent to allow for vacancies and expenses.

Why it matters. The calculation differs depending on whether the property is the one being financed, how long it has been rented and which documents are used, which makes it a frequent source of income errors.

Related: Income calculation, DSCR loan, Self-employed income analysis

Amounts the seller pays toward the buyer's closing costs. Each loan program caps them as a percentage of the price, and anything above the cap must be treated as a reduction in the sale price. Agencies call them interested party contributions.

Also called: interested party contributions, IPCs, seller credits

Why it matters. Concessions above the cap lower the value used for the loan-to-value ratio, which can change eligibility and pricing late in the process.

Related: Gift of equity, Loan-to-value (LTV), Closing Disclosure

Insurance against losses from defects in a property's title, such as undisclosed liens or ownership claims. A lender's policy protects the lender and is required on almost every mortgage. An owner's policy protects the buyer and is optional.

Also called: lender's title insurance, owner's title insurance

Why it matters. The title commitment often surfaces issues, such as old liens or judgments, that become conditions and have to be cleared before closing.

Related: Closing, Conditions, Post-closing

The one-time mortgage insurance premium charged on an FHA loan at closing. It is usually financed into the loan amount.

Also called: UFMIP

Why it matters. Because it is normally added to the loan, it changes the final loan amount and every figure that depends on it.

Related: Mortgage insurance premium (MIP), FHA loan

Compliance, security and vendor risk

The notice a lender must send when it denies an application or offers less favorable terms, stating the specific reasons. Regulators have made clear that the requirement applies in full when a decision involves complex algorithms.

Also called: statement of denial, notice of action taken

Why it matters. A lender must be able to state the actual reasons for a decision, which means any system involved in the decision has to be explainable.

Related: Regulation B, Fair lending, AI audit trail

Where data is physically stored and processed. Many US financial institutions require that borrower data stay within the United States.

Also called: data localization, onshore data

Why it matters. It is a standard question in vendor reviews and a common sticking point with outsourcing providers that use offshore staff.

How Sonar handles it. By default, your data never leaves Sonar's SOC 2 audited environments and never leaves the United States.

Related: Third-party risk management, Mortgage process outsourcing, SOC 2 Type II

The body of law, led by the Equal Credit Opportunity Act and the Fair Housing Act, that prohibits discrimination in lending. It applies to every tool a lender uses, including AI, and lenders remain responsible for the outcomes of the systems they adopt.

Also called: fair lending and AI, ECOA

Why it matters. It is the first compliance question a lender's risk team asks about AI. Applying the same guidelines the same way to every file, and keeping a record of it, supports consistency.

How Sonar handles it. Sonar's AI underwrites to your rules and guidelines, people make the final decision, and every action is auditable.

Related: Regulation B, Adverse action notice, Human in the loop, AI audit trail, HMDA

The federal law that requires financial institutions to protect customers' nonpublic personal information and to explain how they share it. Its Safeguards Rule sets the security program lenders and their service providers must maintain.

Also called: GLBA, Safeguards Rule, NPI

Why it matters. A lender's obligations extend to its vendors, so any provider that touches borrower data has to meet the same standard.

How Sonar handles it. Sonar was built from day one to be trusted with borrower data.

Related: SOC 2 Type II, Third-party risk management, Data residency

The Home Mortgage Disclosure Act, which requires most lenders to collect and report data on every mortgage application they receive. The data has to be accurate at the loan level, which makes it an operations task as much as a compliance one.

Also called: Home Mortgage Disclosure Act, HMDA LAR

Why it matters. Regulators use the data to look for discrimination, and they test its accuracy. Errors are found by comparing the report to the loan file, so the file has to be right.

Related: Fair lending, Regulation B, Uniform Residential Loan Application (Form 1003)

The Home Ownership and Equity Protection Act, a 1994 amendment to the Truth in Lending Act. It defines "high-cost" mortgages by their rate and fees and imposes extra disclosures and restrictions on them. Most lenders test every loan to make sure it does not cross the thresholds.

Also called: high-cost mortgage, Section 32

Why it matters. Most investors will not buy a high-cost loan at all, so the test is effectively pass or fail on every file.

Related: Regulation Z, TILA, Qualified mortgage (QM)

The FHA Single Family Housing Policy Handbook. It is the single source of FHA's rules for originating, underwriting, closing and servicing FHA-insured loans.

Also called: FHA handbook, 4000.1

Why it matters. It is long, detailed and updated regularly, and FHA holds lenders to it loan by loan.

How Sonar handles it. Sonar's AI underwrites to the program's guidelines, including FHA's.

Related: FHA loan, FHA case number, Mortgage insurance premium (MIP)

The Nationwide Multistate Licensing System, the system of record through which mortgage companies and individual loan originators are licensed or registered. Every licensed company and originator has an NMLS ID.

Also called: Nationwide Mortgage Licensing System, NMLS ID

Why it matters. A loan originated by someone not properly licensed in the property's state is a serious defect, so licensing has to be checked on every loan.

Related: Regulation Z, Independent mortgage bank (IMB)

The regulation that implements the Equal Credit Opportunity Act. It prohibits discrimination in any part of a credit transaction, requires lenders to notify applicants of the action taken and the reasons, and requires that applicants receive copies of appraisals.

Also called: Reg B, Equal Credit Opportunity Act

Why it matters. Its notice and timing requirements apply to every application, including those that are withdrawn or incomplete, so they have to be built into the process.

Related: Fair lending, Adverse action notice, HMDA

The regulation that implements the Truth in Lending Act. For mortgages it covers disclosures, the ability-to-repay and qualified mortgage rule, loan originator compensation, and high-cost loan protections.

Also called: Reg Z

Why it matters. More of a mortgage operation's daily checks trace back to Regulation Z than to any other rule.

Related: TILA, Qualified mortgage (QM), TRID, HOEPA

An independent auditor's report on how well a service provider's security controls operated over a period of time, usually six to twelve months. A Type I report, by contrast, only describes the controls at a single date. Banks commonly require a Type II report from vendors that handle customer data.

Also called: SOC 2, SOC 2 report

Why it matters. It is the baseline evidence a bank's vendor review asks for. Without it, most conversations with a regulated lender stop early.

How Sonar handles it. Sonar is SOC 2 Type II, independently audited.

Related: Third-party risk management, Gramm-Leach-Bliley Act (GLBA), Data residency

A bank's or credit union's process for vetting and monitoring the vendors it relies on, covering security, financial strength, compliance and continuity. Federal banking regulators expect it to be most rigorous for vendors that perform critical activities or handle customer data.

Also called: vendor risk management, TPRM, vendor due diligence

Why it matters. Any provider of lending software or services to a bank will go through it. Providers that are ready for the review get through in weeks, and those that are not can stall for months.

How Sonar handles it. We expect a thorough review, and we are happy to share our reports and answer your team's questions as part of due diligence.

Related: SOC 2 Type II, Gramm-Leach-Bliley Act (GLBA), Mortgage process outsourcing, Data residency

The Truth in Lending Act, the 1968 federal law requiring lenders to disclose the cost and terms of credit in a standard way. Regulation Z implements it.

Also called: Truth in Lending Act

Why it matters. It is the foundation for most of the disclosure and timing rules a mortgage operation has to follow.

Related: Regulation Z, TRID, HOEPA

The TILA-RESPA Integrated Disclosure rule, in effect since 2015. It created the Loan Estimate and the Closing Disclosure, sets when each must be delivered, and limits how much fees can increase between the two.

Also called: TILA-RESPA Integrated Disclosure, Know Before You Owe

Why it matters. TRID errors are among the most common compliance findings, and many cannot be fixed after the fact. The timing rules make it as much an operations discipline as a legal one.

Related: Loan Estimate, Closing Disclosure, Initial disclosures, Regulation Z

Channels, agencies and data

A channel in which a lender originates, closes and funds loans in its own name and then sells them to a larger investor. Correspondents may underwrite the loans themselves (delegated) or have the investor underwrite them (non-delegated).

Also called: correspondent lender, delegated underwriting

Why it matters. A delegated correspondent carries the risk of its own underwriting, so file quality directly affects whether its loans are purchased and whether they come back.

Related: Wholesale lending, Repurchase, Post-closing, Independent mortgage bank (IMB)

The Federal National Mortgage Association, a government-sponsored enterprise chartered in 1938 that buys mortgages from lenders and packages them into mortgage-backed securities. It does not make loans. Its guidelines define what most conventional lenders will originate.

Also called: FNMA, Federal National Mortgage Association

Why it matters. Its Selling Guide is, in practice, the rulebook for a large share of US mortgages, and it holds lenders responsible for loans that do not meet it.

Related: Freddie Mac (FHLMC), Desktop Underwriter (DU), Conforming loan, Repurchase

The Federal Home Loan Mortgage Corporation, a government-sponsored enterprise chartered in 1970 that buys mortgages from lenders and packages them into mortgage-backed securities. Like Fannie Mae, it does not make loans.

Also called: FHLMC, Federal Home Loan Mortgage Corporation

Why it matters. Its guidelines are close to Fannie Mae's but not identical, and the differences decide which agency a given loan is better sold to.

Related: Fannie Mae (FNMA), Loan Product Advisor (LPA), Conforming loan, Repurchase

A non-bank lender that originates mortgages and funds them with borrowed warehouse lines, then sells them to investors. IMBs originate the majority of US home loans. With no deposits or other business lines to fall back on, they feel swings in mortgage volume most directly.

Also called: IMB, non-bank lender, mortgage banker

Why it matters. For an IMB, the cost to originate is the business. Those that can grow volume without growing headcount come through a downturn in far better shape.

How Sonar handles it. Sonar Apex is built for IMBs that want to grow volume without growing headcount.

Related: Cost to originate, Mortgage cyclicality, Correspondent lending, Loans per employee

A connection between a loan origination system and another piece of software, usually through the LOS's API, so that data and documents move between them without re-keying. The quality of the integration determines how much a new tool can actually do inside a lender's existing process.

Also called: LOS API, mortgage software integration

Why it matters. A tool that cannot read from and write to the LOS creates a second place to work, and staff stop using it. Depth of integration is the practical test of any mortgage technology.

How Sonar handles it. Sonar Apex works on top of any LOS that has an API, so your core system stays where it is.

Related: Loan origination system (LOS), MISMO, Point of sale (POS), Mortgage automation

The Mortgage Industry Standards Maintenance Organization, which publishes the data standards the industry uses to exchange loan information. The standard loan application and closing datasets are built on it.

Also called: MISMO data standard

Why it matters. Shared data standards are what make it possible to connect systems without custom work for every pair.

Related: LOS integration, Uniform Residential Loan Application (Form 1003), Loan origination system (LOS)

A channel in which a lender funds loans that independent mortgage brokers originate. The broker takes the application and works with the borrower, and the wholesale lender underwrites, closes and funds the loan.

Also called: wholesale mortgage, TPO, third-party origination

Why it matters. Wholesale lenders compete for brokers largely on speed and consistency of underwriting, so turn times are a selling point.

Related: Correspondent lending, Borrower-paid compensation, Lender-paid compensation

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