Can there be any more people involved in the loan process? Well, it turns out there can be…

So here are descriptions of more of the outside services that lenders must use during the process, what they are and how they are used.

Other Related Mortgage Services (continued)

Credit Reporting Agencies: These companies research the credit records of consumers and
memorialize the findings on a factual credit report. They have access to data bases that store credit information on most consumers in the country. Additionally, they search the public records for derogatory items that may have been filed against a consumer, such as judgments, bankruptcies and liens. Frequently, credit reporting agencies will research other items, such as place of employment, banking relationships and previous residency.

Private Mortgage Insurance Companies (PMI): When the loan exceeds 80 percent of the lower of the appraised value or the purchase price, lenders usually require private mortgage insurance that insures the lender in the event a borrower defaults and the property ends up in foreclosure. There are a small number of companies that provide this insurance. Borrowers pay for this insurance as part of the monthly payment.

Hazard Insurance Companies: Lenders require hazard insurance that covers the outstanding loan on the property. There are many casualty insurance companies that provide hazard insurance. In most cases, the lender is the loss payee on the policy and will receive the proceeds on a claim. The proceeds will then be used to pay for the repairs.

Flood Certification Companies: Provides all required flood map and community status information to ensure property flood status.