Main Objective

• To understand the Mortgage Operations System of US and India.

• To know how many Mortgage Applications filed in US and India.

• To know the set of documents required in the Mortgage Process in US and India.

Objective of Study

1. What is Mortgage

2. Different types of operations and processes involved in the Loan Sanction.

Need of Study

1. How mortgage industry is helping US to boost their economy.

2. How mortgage industry is providing employment to their people.

3. How mortgage industry work in US and how it is different from India.

The techniques, which is used for study:

1. By studying research report.

2. By studying guidelines issued by government sponsored entity.

1
 Introduction

What is a Mortgage?

A mortgage is a debt instrument, secured by the collateral of specified real estate

property, that the borrower is obliged to pay back with a predetermined set of
payments. Mortgages are used by individuals and businesses to make large real estate
purchases without paying the entire purchase price up front. Over many years, the
borrower repays the loan, plus interest, until he or she owns the property free and
clear. Mortgages are also known as "liens against property" or "claims on property." If
the borrower stops paying the mortgage, the lender can foreclose.

Mortgage payments are usually monthly and consist of four components: principal,
interest, taxes and insurance

Mortgages are considered secured loans, meaning that they’re backed up by an asset
the house should the homeowner default. When the borrower defaults, lenders are
permitted to take back the house, which is called foreclosure. For this reason, some
lenders require borrowers to take out some kind of insurance, such homeowners’
insurance, which covers material damage to the property, or mortgage insurance,
which protects the lender in case the borrower defaults .In a residential mortgage, a
homebuyer pledges his or her house to the bank. The bank has a claim on the house
should the homebuyer default on paying the mortgage. In the case of a foreclosure,
the bank may evict the home's tenants and sell the house, using the income from the
sale to clear the mortgage debt

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Mortgages come in many forms. With a fixed-rate mortgage, the borrower pays the
same interest rate for the life of the loan. The monthly principal and interest payment
never changes from the first mortgage payment to the last. Most fixed-rate mortgages
have a 15- or 30-year term. If market interest rates rise, the borrower’s payment does
not change. If market interest rates drop significantly, the borrower may be able to
secure that lower rate by refinancing the mortgage. A fixed-rate mortgage is also
called a “traditional" mortgage.

With an adjustable-rate mortgage (ARM), the interest rate is fixed for an initial term,
but then it fluctuates with market interest rates. The initial interest rate is often a
below-market rate, which can make a mortgage more affordable in the short term but
possibly less affordable in the long term. If interest rates increase later, the borrower
may not be able to afford the higher monthly payments. Interest rates could also
decrease, making an ARM less expensive. In either case, the monthly payments are
unpredictable after the initial term.

Other less common types of mortgages, such as interest-only mortgages and payment-
option ARMs, are best used by sophisticated borrowers. Many homeowners got into
financial trouble with these types of mortgages during the housing bubble years of the
mid-2000s.

When shopping for a mortgage, it is beneficial to use a mortgage calculator, as this

tool can give you an idea of the monthly payments for the mortgage you're
considering. Mortgage calculators can also help you calculate the total cost of interest
over the life of the mortgage so you'll know what buying a property will really cost
you.

3
 Types of Mortgages

1. 40-Year Fixed Rate Mortgages

Borrowers with fixed-rate mortgages may have a low rate of foreclosure, but that
doesn't mean that fixed-rate mortgages are always a good idea. The 40-year fixed-rate
mortgage is one such product because the longer you borrow money for, the more
interest you pay.

Let's say you want to buy a $200,000 home with a 10% down payment. The amount
you'll need to borrow is $180,000 ($200,000 minus $20,000).

At an interest rate of 5%, here are the monthly payments and the total amount you'll
pay for the home under various terms if you keep the loan for its life:

Lifetime Cost
Interest Monthly Principal(including Total
Term (including down
Rate Payment down payment) Interest Paid
payment)
15
5.0% $1,423.43 $276,217.14 $200,000 $76,217.14
years
20
5.0% $1,187.92 $305,100.88 $200,000 $105,100.88
years
30
5.0% $966.28 $367,860.41 $200,000 $167,860.41
years
40
5.0% $867.95 $436,617.86 $200,000 $236,617.86
years

Figure 1: Interest and principal paid on a mortgage over various terms (years)

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The chart above is a simplified comparison. In reality, the interest rate will be lowest
for the 15-year loan and highest for the 40-year loan. Here's a more realistic
comparison:

Lifetime Total
Interest Monthly Principal(including
Term Cost(including Interest
Rate Payment down payment)
down payment) Paid
15
4.5% $1,376.99 $267,858.83 $200,000 $67,858.83
years
20
5.0% $1,187.92 $305,100.88 $200,000 $105,100.88
years
30
5.2% $988.40 $375,823.85 $200,000 $175,823.85
years
40
5.8% $965.41 $483,394.67 $200,000 $283,394.67
years
Figure 2: Interest and principal paid on a mortgage over various terms (years) and
interest rates.

As you can see in Figure 2 above, the 40-year mortgage is 0.6% higher in interest, and
it will lower your monthly bill by just $23, from $988 to $965. However, it will cost
you an extra $107,570.82 over the life of the loan. Most people cannot afford to throw
away that kind of money. Taking out a 40-year mortgage increases your risk of not
having enough for retirement, not being able to pay for your children's college
education or any number of other scenarios. At best, you're forgoing $107,570.82 that
you could have spent on vacations, electronics, nice dinners, and other fun
expenditures. Who wants to do that?

2. Adjustable Rate Mortgages

Adjustable-rate mortgages (ARMs) have a fixed interest rate for a short initial term
that can range from six months to 10 years. This initial interest rate, called a teaser
rate, is often lower than the interest rate on a 15- or 30-year fixed loan. After the

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initial term, the rate adjusts periodically - that might be once a year, once every six
months or even once a month.

"Any loan that has a fixed interest rate for a period shorter than the term of the loan is
running a huge interest rate risk," says California real estate broker Greg Cook of the
First Time Home Buyer Network.

Interest rate risk is the risk that if interest rates increase, the monthly payments under
an ARM will become more expensive, and in some cases that is an expense that the
homeowner can't afford.

The element of unpredictability that comes with ARMs is a problem for many people,
especially if they are on a fixed income or don't expect their incomes to rise.

ARMs become even riskier if you have a jumbo mortgage, simply because the higher
your principal, the more a change in interest rate is going to affect your monthly
payment.

That being said, Mary Tootikian, an experienced mortgage processor

and underwriter and the author of the book "Stunned in America," points out that
"Historically, people do not stay in their homes or their mortgages for more than five
to seven years. Therefore, why pay a higher rate [for a] 30-year fixed loan when a
lower rate mortgage will do?"

It's also important to note that an adjustable interest rate can adjust downward,
decreasing the monthly payment. This means that ARMs can be a good choice if you
expect interest rates to decrease in the future. Of course, you can't predict the future.
(Both of types of mortgages have advantages and disadvantages depending on your
financial needs and prospects. For more insight, read Mortgages: Fixed-Rate Versus
Adjustable-Rate.)

3. Interest-Only Mortgages

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With an interest-only (IO) mortgage, the borrower pays only the interest on the
mortgage for the first for five to 10 years, allowing for a lower monthly mortgage
payment during this time. This makes interest-only mortgages attractive to some real
estate investors who will own a home for only a short period of time and want to
reduce their carrying costs.

IO mortgages can also be good for people who earn an irregular income and people
who have significant potential for income increases in the future, but only if they are
disciplined enough to make higher payments when they can afford to do so.

The downside is that the interest rate on an IO mortgage tends to be higher than the
rate you would pay on a conventional fixed-rate mortgage because people default on
interest-only loans more often. (These loans can be beneficial, but for many
borrowers, they present a financial trap. Learn more in Interest-Only Mortgages:
Home Free or Homeless?)

Furthermore, if you are not a financially sophisticated borrower, interest-only

mortgages can be extremely risky for any one or more of the following reasons:

• You can't afford the significantly higher monthly payments when the interest-
only period ends. At this point, you'll still be paying interest, but you'll also be
repaying the principal over a shorter period than you would with a fixed-rate
loan.
• You can't refinance because you have little to no home equity.
• You can't sell because you have little to no home equity and home prices have
declined, putting you underwater.
• Borrowers who keep the interest-only loan for the life of the loan will pay
significantly more interest than they would have with a conventional
mortgage.
• Depending on how the loan is structured, you may face a large balloon
payment of principal at the end of the loan term.

If you are a borrower who is not a good candidate for an IO loan, any of these
problems could cause you to lose the home in a worst-case scenario. In a slightly less-

7
bad scenario, the IO loan could simply cost you much more than you really need to
pay to be a homeowner.

4. Interest-Only ARMs

With some interest-only loans, called interest-only ARMs, the interest rate is not fixed
but can go up or down based on market interest rates. Essentially, the interest-only
ARM takes two potentially risky mortgage types and combines them into a single
product.

Here's an example of how this product can work. The borrower pays interest only, at a
fixed rate, for the first five years. Then, for the next five years, the borrower continues
to pay interest only, but the interest rate adjusts annually based on market interest
rates, meaning that the borrower's interest rate can either go up or down. Then, for the
remainder of the loan term, say, 20 years, the borrower will repay a fixed amount of
principal each month plus interest each month at an interest rate that changes
annually.

Many people simply do not have the financial or emotional wherewithal to withstand
the uncertainty that comes with interest-only ARMs. (For more check out Payment
Option ARMs: A Ticking Time Bomb?)

5. Low Down Payment Loans

It seems low-risk to only put 3.5% down because you're not parting with a lot of cash.
And in fact, VA loans and Federal Housing Administration (FHA) loans, which have
down payment requirements of 0% and 3.5%, respectively, have some of the lowest
foreclosure start rates. The problem with making a low down payment is that if home
prices drop, you can get stuck in a situation where you can't sell or refinance.

If you have enough money in the bank, you can buy yourself out of your mortgage,
but most people who make low payments on their homes don't have significant cash
reserves.

6. Reverse Mortgage.

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This type of mortgage is for seniors only. A reverse mortgage gives homeowners access
to their home’s equity in a loan that can be withdrawn in a lump sum, with set monthly
payments, or as a revolving line of credit. Homeowners don’t have to make payments, but
the lender will have a lien on the home for the amount owed upon the death of the
borrower(s).
With a reverse mortgage, you’re find until you have to move out of the house. If you
move out, even if it’s before your death, you’ll need to repay the mortgage out of the
proceeds of the loan. This can drain the equity many seniors depend on to fund long-term
care expenses. In some situations, a reverse mortgage can be a reasonable choice. Just be
sure you know what you’re getting into.

7. Combination Mortgage

Combination mortgages are helpful for avoiding Private Mortgage Insurance (PMI) if you
can’t put 20 percent down on a home. Usually, you take out one loan for 80 percent of the
home’s value and another for 20 percent of the home’s value. This is an 80/20
combination loan. Usually the first loan has a lower, fixed interest rate. The second loan
has a higher rate and/or a variable rate.
This can sometimes be more expensive interest-wise. But do the math. PMI can be
expensive, as well. If you can pay off the higher-rate 20 percent equity loan quickly, you
may come out better off with a combination mortgage.

8. Government-Backed Mortgage

In an effort to encourage home-ownership, the federal government offers some loans

that are backed by government entities. This means that if a borrower defaults on the
loan, the government will cover the lender’s losses. Because of this guarantee,
government-backed loans are often an ideal solution for first-time and low-income
home buyers.
• FHA Loans: These loans are backed by the Federal Housing Administration and are
great for first-time home buyers or those with bad credit. FHA loans can be used for
single-family homes, cooperative housing projects, some multifamily homes, and
condominiums. The specialized FHA 203(k) loan can also be used to fix up a home in
need of significant repairs.

9
• USDA Loans: The United States Department of Agriculture encourages rural home
ownership with specialized, low down payment loans for certain families buying
homes in rural areas.
• VA Loans: The Department of Veterans Affairs backs these zero down loans for
active duty, reserve, national guard, and veteran members of any branch of the armed
forces.
• Indian Home Loan Guarantee: These HUD loans are available to lower-income
Native Americans, as well as Native Alaskans and Hawaiians.
• State and Local Programs: If you’re struggling to come up with a down payment
or adequate credit score for a home loan, check out state and local government
programs. Many programs are geared toward revitalizing areas where many homes
are abandoned or in need of repair.

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LOAN PROCESS

▪ Pre-Qualification

▪ Mortgage Programs and Rates

▪ Application

▪ Loan Estimate

▪ Intent to Proceed

▪ Processing

▪ Required Documents

▪ Credit Reports

▪ Appraisal Basics

▪ Underwriting

▪ Closing Disclosure

▪ Closing

▪ Summation

11
Figure: Different types of processes involved in Loan Process

12
Pre-Qualification
Pre-qualification starts the loan process. Once a lender has gathered information about
a borrower's income and debts, a determination can be made as to how much the
borrower can pay for a house. Since different loan programs can cause different
valuations a borrower should get pre-qualified for each loan type the borrower may
qualify for.
In attempting to approve homebuyers for the type and amount of mortgage they want,
mortgage companies look at two key factors. First, the borrower's ability to repay the
loan and, second, the borrower's willingness to repay the loan.
Ability to repay the mortgage is verified by your current employment and total
income. Generally speaking, mortgage companies prefer for you to have been
employed at the same place for at least two years, or at least be in the same line of
work for a few years.
The borrower's willingness to repay is determined by examining how the property
will be used. For instance, will you be living there or just renting it out? Willingness
is also closely related to how you have fulfilled previous financial commitments, thus
the emphasis on the Credit Report and/or your rental payment history.

13
It is important to remember that there are no rules carved in stone. Each applicant is
handled on a case-by-case basis. So even if you come up a little short in one area,
your stronger point could make up for the weak one. Mortgage companies could not
stay in business if they did not generate loan business, so it is in everyone's best
interest to see that you qualify.

Mortgage Programs and Rates

To properly analyze a mortgage program, the borrower needs to think about how long
he plans to keep the loan. If you plan to sell the house in a few years, an adjustable or
balloon loan may make more sense. If you plan to keep the house for a longer period,
a fixed loan may be more suitable.
With so many programs from which to choose, each with different rates, points, and
fees, shopping for a loan can be time-consuming and frustrating. An experienced
mortgage professional can evaluate a borrower's situation and recommend the most
suitable mortgage program, thus allowing the borrower to make an informed decision.

Application
The application is the true start of the loan process and usually occurs between days
one and five of the start of the loan process. With the aid of a mortgage professional,
the borrower completes the application and provides all Required Documentation.
The various fees and closing cost estimates will have been discussed while examining
the many mortgage programs and these costs will be verified by the Loan Estimate
(LE) which the borrower will receive within three days of the submission of the
application to the lender.

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Loan Estimate
Loan Estimate is a three-page form that you receive after applying for a mortgage.
The Loan Estimate tells you important details about the loan you have requested. We
will deliver this to you within 3 days of your fully completed loan application. The
Loan Estimate provides you with important information, including the estimated
interest rate, monthly payment, and total closing costs for the loan. The Loan Estimate
also gives you information about the estimated costs of taxes and insurance, and how
the interest rate and payments may change in the future. In addition, the Loan
Estimate will also indicate if the loan has special features that you will want to be
aware of, like penalties for paying off the loan early (a prepayment penalty) or
increases to the mortgage loan balance even if payments are made on time (negative
amortization). The form uses clear language and is designed to help you better
understand the terms of the mortgage loan you’ve applied for. All lenders are required
to use the same standard Loan Estimate form. This makes it easier for you to compare
mortgage loans so that you can choose the one that is right for you. When you receive
a Loan Estimate it does not mean that your loan has been approved or denied. The
Loan Estimate shows you what loan terms we can offer you if you decide to move
forward.

Intent to Proceed
After you receive your Loan Estimate, it is up to you to decide whether to move
forward with us or not. If you decide not to proceed with an application for a
particular loan, you don’t need to do anything further. If you do intend to proceed
with us, you must take the next step and tell us in writing or by phone that you want to
move forward with the application for that loan. All lenders are required to honor the
terms of the Loan Estimate for 10 business days. So if you decide to move forward
more than 10 business days after you receive a Loan Estimate, please realize that
market conditions may make it necessary to revise the terms and estimated costs and
provide you with a revised Loan Estimate.

Processing
Once the application has been submitted, the processing of the mortgage begins. The
Processor orders the Credit Report, Appraisal, and Title Report. The information on
the application, such as bank deposits and payment histories, are then verified. Any
credit derogatories, such as late payments, collections and/or judgments require a

15
written explanation. The processor examines the Appraisal and Title Report checking
for property issues that may require further investigation. The entire mortgage
package is then put together for submission to the lender.

Required Documents
Once you have completed the loan application, accepted the loan estimate and
indicated your intent to proceed we will request documents from you in order to
obtain your loan approval. The following statements are not a complete list of what
will be needed but are intended to

16
give you some idea of what we will need from you. Once you get to this stage of the
loan process, we will give you a specific set of documents that we will need for your
particular loan. If you are purchasing or refinancing your home, and you are salaried,
you will need to provide the past two-years W-2s and one month of pay-stubs: OR, if
you are self-employed you will need to provide the past two years tax returns. If you
own rental property you will need to provide Rental Agreements and the past two
years' tax returns. If you wish to speed up the approval process, you should also
provide the past three months' bank, stock, and mutual fund account statements.
Provide the most recent copies of any stock brokerage or IRA/401k accounts that you
might have.
If you are applying for a Home Equity Loan you will need, in addition to the above
documents, to provide a copy of your first mortgage note and deed of trust. These
items will normally be found in your mortgage closing documents.

Credit Reports
Most people applying for a home mortgage need not worry about the effects of their
credit history during the mortgage process. However, you can be better prepared if
you get a copy of your Credit Report before you apply for your mortgage. That way,
you can take steps to correct any negatives before making your application.
A Credit Profile refers to a consumer credit file, which is made up of various
consumer credit reporting agencies. It is a picture of how you paid back the
companies you have borrowed money from, or how you have met other financial
obligations. There are five categories of information on a credit profile:
• Identifying Information

• Employment Information

• Credit Information

• Public Record Information

• Inquiries

17
Appraisal Basics
An appraisal of real estate is the valuation of the rights of ownership. The appraiser
must define the rights to be appraised. The appraiser does not create value, the
appraiser interprets the market to arrive at a value estimate. As the appraiser compiles
data pertinent to a report, consideration must be given to the site and amenities as well
as the physical condition of the property. Considerable research and collection of data
must be completed prior to the appraiser arriving at a final opinion of value.
Using three common approaches, which are all derived from the market, derives the
opinion, or estimate of value. The first approach to value is the COST APPROACH.
This method derives what it would cost to replace the existing improvements as of the
date of the appraisal, less any physical deterioration, functional obsolescence, and
economic obsolescence. The second method is the COMPARISON APPROACH,
which uses other "bench mark" properties (comps) of similar size, quality, and
location that have recently sold to determine value. The INCOME APPROACH is
used in the appraisal of rental properties and has little use in the valuation of single-
family dwellings. This approach provides an objective estimate of what a prudent
investor would pay based on the net income the property produces.

Underwriting
Once the processor has put together a complete package with all verifications and
documentation, the file is sent to the lender. The underwriter is responsible for
determining whether the package is deemed an acceptable loan. If more information is
needed, the loan is put into "suspense" and the borrower is contacted to supply more
information and/or documentation. If the loan is acceptable as submitted, the loan is
put into an "approved" status.

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Closing Disclosure
The Closing Disclosure is a five-page form that provides final details about the
mortgage loan you have selected. It includes the loan terms, your projected monthly
payments, and how much you will pay in fees and other costs to get your mortgage
(closing costs).
We are required by law to give you the Closing Disclosure at least three business days
before you close on your mortgage loan. This three-day window allows you time to
compare your final terms and costs to those estimated in the Loan Estimate that you
previously received from us. The three days also gives you time to ask us any
questions before you go to the closing table.

Closing
Once the loan is approved, the file is transferred to the closing and funding
department. The funding department notifies the broker and closing attorney of the
approval and verifies broker and closing fees. The closing attorney then schedules a
time for the borrower to sign the loan documentation.
At the closing the borrower should:
• Bring a cashier check for your down payment and closing costs if required. Personal
checks are normally not accepted and if they are they will delay the closing until the
check clears your bank.

• Review the final loan documents. Make sure that the interest rate and loan terms are
what you agreed upon. Also, verify that the names and address on the loan documents
are accurate.

• Sign the loan documents.

After the documents are signed, the closing attorney returns the documents to the
lender who examines them and, if everything is in order, arranges for the funding of
the loan. Once the loan has funded, the closing attorney arranges for the mortgage
note and deed of trust to be recorded at the county recorders office. Once the
mortgage has been recorded, the closing attorney then prints the final settlement costs
on the final CD. Final disbursements are then made.

19
PARTIES INVOLVED IN TRANSACTION

Mortgagee:
Mortgagee is the lender who provide funds for a mortgage. Lenders also manage the
credit and financial information review, the property review and the mortgage loan
application process through closing.

Mortgagor:
A person that has applied, met specific requirements, and received a monetary loan
from a lender. The individual initiating the request signs a promissory note agreeing
to pay the lien holder back during a specified timeframe for the entire loan amount
plus any additional fees. The borrower is legally responsible for repayment of the loan
and is subject toany penalties for not repaying the loan back based on the lending
terms agreed upon.

Real estate agent:

Unless you’re working with a private vendor, meeting a real estate agent is inevitable
when it comes to purchasing a property. Hired by the vendor, or seller, their role is to
market and communicate about the property, advise on preparing it for sale and
negotiate with potential buyers.
Real estate professionals (REPs) can help you find the kind of home you seek,
examine comparable homes and compare different neighborhoods. They often provide
specific community information on shopping, schools, property tax rates and more.
Most important, REPs can look for homes that meet your needs and financial
circumstances, helping you narrow your choices. And when you’re ready to make an
offer on a home, the real estate professional will usually handle the negotiations with
the seller, including presenting your offer (what you’re willing and able to pay for the
property). To find a real estate agent professional, you should ask your family and
friends for referrals. You can also find an agent a REP who makes you feel
comfortable and can provide the knowledge and services you need. The real estate
agent professional is almost always paid by the seller upon the sale of the home.

Insurance companies:
Risk management is vital in such a high-value purchase and long-term financial
commitment. Insurance, including mortgage protection and property insurance, will

20
help you avoid being hit with a major financial burden should anything not go
according to plan. Many finance brokers can deal with insurance as well or will
recommend an insurance broker who can.

Pest and building inspectors:

Without the services of pest and building inspectors, a homebuyer’s worst nightmare
– finding out the property they have bought requires costly renovations or pest
treatment – may come true. Organising a pre-purchase inspection is essential. If the
property requires structural, wiring or repair work, these inspections can stop you
from making a costly mistake or, if the property is still your dream home but just
needs a little work, can provide a valuable bargaining chip.

Escrow:
An escrow is where the funds, deed, or other instruments are deposited and then
distributed/disbursed when conditions are met. The escrow is the one who “holds on”
to everything and then once the conditions are met, they process the escrow and
complete the transaction.

Title:
A title company examines and insures title claims on the property. The company
provides a certificate based on the results of its examination. Notary
This is the person who witnesses you sign the loan documents and “notarizes” the
paperwork.

Loan Officer:
Loan officers are mortgage specialists; they will use your credit, financial and
employment information to see if you qualify for a mortgage and then come up with
mortgage financing options that match your financial capacity. There are a variety of
different mortgage options available. Fixed-rate mortgages provide a stable option
since your interest rate remains the 27

21
same for the length of your loan. The most common fixed-rate mortgage is a 30-year
fixed-rate, although 15- and 20-year fixed-rate mortgages also provide certain
advantages. Your loan officer will also help you complete your mortgage loan
application and keep track of what’s happening during the loan approval process.
Please be sure to read Section 3, What You Should Know About Your Mortgage Loan
Application.

Loan Processor:
The loan processor’s job is to prepare your mortgage loan information and application
for presentation to the underwriter. The loan processor will ask you for many
documents, including documents about your income, your employment, your monthly
bills and how much you have in the bank. In addition, the loan processor must make
sure that all proper documentation is included, that all numbers are calculated
correctly and double checked and that everything is stacked in the proper order. A
well-processed loan file can decrease the amount of time it takes for a decision about
your mortgage loan application.

Home Inspector:
Hiring a professional home inspector can be one of the most important things you can
do to make sure your home is in good condition. An authorized inspector can uncover
defects with the house that could cost you a lot of money down the road. For example,
if the home inspector finds a serious problem, like a roof that needs to be replaced,
you’ll know upfront and can negotiate with the seller for the cost of the roof repair or
replacement. If you don’t find out that sort of thing until after you own the house, the
problems (and costs) are yours alone. Your real estate professional can be a good
reference for a home inspector.

22
HOW MORTGAGE INDUSTRY IS PROVIDING EMPLOYMENT TO THEIR
PEOPLE

Employment is a relationship between two parties, usually based on a contract where

work is paid for, where one party, which may be a corporation, for profit, not-for-
profit organization, co-operative or other entity is the employer and the other is the
employee.[1]Employees work in return for payment, which may be in the form of an
hourly wage, by piecework or an annual salary, depending on the type of work an
employee does or which sector they are working in. Employees in some fields or
sectors may receive gratuities, bonus payment or stock options. In some types of
employment, employees may receive benefits in addition to payment. Benefits can
include health insurance, housing, disability insurance or use of a gym. Employment
is typically governed by employment laws, regulations or legal contracts.

What Does It Mean to Be Employed?

Employment is an agreement between an employer and an employee that the

employee will provide certain services on the job. The employment agreement
ensures that:
• The work will occur in the employer's designated workplace (which can a
telecommuter's home)
• The work is designed to accomplish the employer organization’s goals and mission
• In exchange for work performed, the employee receives compensation

An employment agreement for an individual employee can be verbal, written in an

email, or it can be a job offer letter. The offer of employment can be implied in an
interview or written in a formal, official employment contract.

Time and Compensation of Employment

Employment runs the gamut in terms of the different kinds of time commitments and
compensation plans. No two jobs are alike.
For example, employment can be:
• An hourly part-time job that is paid a certain dollar amount for each hour worked

23
• Full-time employment in which individuals receive a salary and benefits from an
employer for performing all the tasks required by a particular position.

• Employment can last for a short period of time or it can last for 30-40 years with the
same employer.
• Employers can offer flexible employee work schedules or require the employee to
work Monday–Friday from 8 a.m. to 5 p.m. with an hour off for lunch and two 20-
minutes breaks, one in the morning and one in the afternoon (as required by law).

As long as the employer upholds his end of the deal to pay the employee (and pay on
time) and the employee wants to continue to work for his employer, the employment
relationship will continue.
This takes into consideration the fact that the terms and conditions of employment are
largely in the hands of the employer. Individual employees can negotiate certain terms
of a contract (such as a higher compensation, or additional days off) but the location,
hours of work, the work environment, and even the organizational culture are set in
cement by the employer.
The best time to negotiate is before accepting a job offer if options such as a flexible
work schedule are desired.
Employment ends at the prerogative of the employer or the employee. Especially in
locations that are right-to-work at-will states, employers may terminate employment
or employees may quit for no reason or any reason they choose.
The most regularly referenced economic indicator for the state of employment in the
United States is the unemployment rate. The unemployment rate is the share of the
labour force currently without a job but seeking employment. In 2018, the civilian
labour force of the United States numbered about 162.07 million people. In economic
terms a distinction is made between the labour force and the general population. The
employment rate evaluates the share of the total population (excluding
institutionalized persons) currently engaged in employment.
The unemployment rate remained stagnant at 3.7 percent, with an added 164,000 jobs
in July, just 1,000 below the Dow Jones prediction.
Friday’s report also included revisions to previous data, adjusting May and June’s
reports down by 41,000 jobs. June’s change dropped to 193,000 jobs, and May’s
reading of 72,000 jobs was cut even further to 62,000. Following revisions, job gains
averaged at 140,000 per month over the past three months.

24
With recent jobs reports coming in near economists’ expectations, analysts believe the
data will bring little change regarding the Federal Reserve cutting interest rates.
“Overall, this report won’t be enough to move the needle much in either direction as
far as a September rate cut is concerned, but it reinforces our sense that another move
next month isn’t yet as sure a thing as the markets are now pricing in,” Andrew
Hunter, senior U.S. economist at Capital Economics.
As for the labor force participation rate, it unexpectedly ticked up to 63 percent, the
highest level since March; showing that more workers are either employed or actively
looking for work. Average hourly wages also rose 0.3 percent month-over-month,
pushing the year-over-year wage growth to 3.6 percent.

Mortgage industry comes under Financial Activities. The financial activities

supersector consists of these sectors:
• Finance and Insurance

• Real Estate and Rental and Leasing:

Mortgage industry provide employment in below companies.

Mortgage lender
Real estate agent
Insurance companies
Pest and building inspectors
Escrow Company
Title Company
Home Inspector

25
HOW MORTGAGE INDUSTRY IS HELPING US TO BOOST THEIR
ECONOMY

Though the U.S. economy continued to strengthen throughout 2018, the mortgage
industry faced increasing challenges related to rising interest rates, margin
compression and compliance requirements. Along with these challenges also came
new technological innovations that simplified processes and improved the customer
experience, helping to position mortgage lenders more competitively in the future.

1. Rising Rate Environment Interest rates continued to rise in 2018. According to

Mortgage Bankers Association's recent survey, in 2018 the 30-year fixed-rate
mortgage interest rate rose to its highest level since 2011, topping five percent. In
December, The Federal Reserve jolted markets for the fourth time within a year by
raising its benchmark interest rate again.
The Fed recently announced that it plans to slow rate hikes in 2019, so the story may
be different this year. Last year, however, loan officers were mainly concerned with
this rising rate environment and its effects on home sales. As seen in the past,
borrowers are highly sensitive to wavering interest rates. Any change, whether big or
small, is enough to alarm loan officers. As rates go up, consumers perceive that their
house payments are also going to go up. When consumers are anxious about rising
payments, fewer enter the housing market with the intent to buy. Additionally, as
interest rates rose, some interested borrowers were no longer qualified. A quarter of a
percentage increase can make some prospective borrowers ineligible.
Effectively, the rising rate environment forced many mortgage office closings and
staff layoffs. Among the many companies making headlines last year for layoffs were
Wells Fargo, which eliminated 638 mortgage jobs, and JPMorgan Chase, which cut
400.

2. Margin Compression Margins compressed across the board in 2018 as a result of

the rising rate environment. As interest rates continued to rise, the number of
interested borrowers decreased. Mortgage lenders tried to compete for the reduced
loan volume by cutting margins. The increased competition resulted in decreased
profitability. Lenders were pricing loans lower and lower based on competitors,
resulting in margins that were nearly impossible to make a profit on. As lenders
priced loans below their threshold of profitability, it no longer mattered whether they

26
beat out their competitors or not, because they were in turn putting themselves out of
business.
In fact, according to the Mortgage Bankers Association's Quarterly Mortgage Bankers
Performance Report of Q3 2018, only 59 percent of mortgage bankers were
profitable. Lenders found themselves bailing out and consolidating.
3. Compliance As the mortgage industry faced economic challenges, additional
issues with compliance arose. Mortgage lenders attempted to be creative and discover
new tactics to help drive business and increase margins. As they stepped out of their
comfort zone, they also had to pay close attention to risk and ensure all investments
were up to compliance standards.
Advancements in technology also brought challenges to compliance. New technology
practices brought risk, but so did failing to innovate. Analyzing new technologies and
processes to ensure compliance is being met is critical.
Additionally, it was (and still is) critical that organizations have a strong compliance
sector that could fully comprehend rules and regulations and how to apply them in
daily operations. It was important to monitor how much compliance risk a company
presented and to conduct internal auditing and testing to ensure that adequate
compliance controls were in place.
In previous years, lenders played catch up and established robust compliance systems
only after the need presented itself. Last year, federal and state regulators continued
applying pressure to all aspects of lending, heightening the mortgage industry's need
for skilled compliance professionals.
4. Technology and the Consumer Experience While past year saw its fair share of
challenges, there were also many advancements, particularly those focused on
reducing the number of touch points and enhancing the borrower experience. The
mortgage industry has moved beyond paper forms and emailed documents. New
tools, such as digital lending platforms and machine learning, made it easier for
lenders to guide borrowers through the origination process and discover new
opportunities.
Last year it took an average of 44 days to close a mortgage. In an effort to reduce that
number, many lenders began moving toward online originations. Companies that
began offering digital lending platforms were able to reduce this process to 30 days.
By offering customers faster closing and increased insight into the process, lenders
that leverage digital platforms create a more convenient experience for borrowers
while also lowering costs.

27
Beyond speeding up the loan application process, technology also allowed lenders to
use machine learning to verify and track information, resulting in other cost savings,
more affordable loan fees and a better consumer experience altogether.
As digital lending increased, so did the voice of the consumer. Consumers were able
to redefine what "digital" meant to them, how it impacted their buying decision and
how they chose to interact with their lender. Consumers are using multiple channels
and methods, which they expect to be interchangeable. This has become an
expectation lenders were forced to deliver on or risk losing business. This trend will
continue as both technology and consumer expectations evolve.
There is no denying it--the 2018 mortgage lending environment saw challenges and
advancements; however, the lessons learned from the challenges faced will continue
to propel the mortgage industry forward. With many new developments and much to
look forward to in the future, it's important for lenders to maintain their focus on
consumers, who have a heavy hand in driving positive change.

28
 Company Profile

XL Dynamics India Pvt. Ltd. established in 2002 and incorporated in 2005, XL

Dynamics India Pvt. Ltd. is a privately held corporation providing IT, audit
and quality control outsourcing solutions to a defined clientele in the US
mortgage industry. Being a technology savvy organization, we have helped
clients to develop integrated technology platform to bring the best of the
mortgage solutions. Our experience in financial services and the mortgage
banking industry, with a blend of technology and our focus on providing the
highest quality financial services to our clients in US from our operation
centers in India; enables us to provide the most efficient and cost effective
services to our customers.

XL Dynamics India Pvt. Ltd. assists client to develop web-enabled solution

which is used for loan origination and servicing system and which is one of the
most advanced technology platforms in the industry. XL Dynamics conforms
to international standards to foster an efficient and contemporary work
environment.

XL Dynamics India Pvt. Ltd.’s implementation and delivery model leverages

capacity, capabilities, and competencies to achieve excellent customer
satisfaction. Being a business driven by customer success, we manage annual
transactions and mortgage portfolios worth billions of US dollars. We have
four Operation Centers and one Training Center in Navi Mumbai.

29
XL Dynamics has dedicated it’s existence to serving it’s customers.

When working at XL Dynamics, you work for it’s customer. It’s customers are
US Homeowners, American Families. Every month you will fulfil the lives of
16,000 Americans from 4,000 American families who put their faith in XL
Dynamics every month.

It’s a matter of National Pride:

We show the world that the Indian Workforce is the best among all the Global
Sectors. You definitely want the 16,000 Americans you serve to have the best
experience working with your Company and your Country.

What makes jobs at XL Dynamics important is the consistency in the

dedication to excellence when serving our customers. Our jobs can easily be
done by competing countries in the Global Outsourcing World like the
Philippines, China and other such emerging countries. Our consistent
dedication to excellence is the only motivator for customers to expand their

30
business with us and in turn bring employment opportunities to our Country,
India.

Continuous Learning and Development:

Whether it’s the close interaction with the senior management or providing
roles with greater responsibilities and with that, greater accountability, your
learning and development is one of our top priorities. With more than 90% of
our employees being highly qualified MBAs, you will always have something
to learn from those around you.

Get inspired by your colleagues:

We are an organization where you will be surrounded by dynamic, intelligent

and young employees in the average age group of 22-27 years. This is a chance
to work within a culture of camaraderie and grow your career the way you
want.

Count On Us for Career Growth:

Our robust Career Power Path which ensures Employees regularly takes steps
up in their career the moment they are ready. Promotions in the organization
are only based on performance. You begin taking steps up in the Power Path
the moment you complete 3 months in the Organization. Each step up may
come with a Salary Revision, which means you could potentially have 4 Salary
revisions a year. Within 2 Years an employee can begin earning salaries close
to Rs. 15 – 20 Lakhs p.a.

You are also eligible to apply for vertical growth opportunities through internal
job postings on completion of 3 months of joining the organization. This means
a Financial Analyst can become a Team Leader or a Subject Matter Expert
(SME) after 3 months of joining a company. With an exponential growth of
over 300% in the number of employees in the last two years, our rate of
promotion is one of the highest amongst the industry.

31
 Benefits Given by Xl Dynamics

At XL Dynamics we believe in looking after all of our employee’s needs. Here

are some of the perks and perquisites all employees are entitled to:

1. Snacks at every Employee’s Desk at no charge:

Snacks with Coffee / Tea served to every employee thrice a day at their desks
by the cafeteria personnel free of charge.

2. Buffet Lunch / Dinner at a 5 Star Hotel:

For employees who work on weekends, there is a complimentary Lunch /
Dinner Buffet at a 5 star restaurant.

3. Transportation Facilities:
o For Lady Employees who are at office beyond 8 PM, a special
“Priyadarshini” cab service with lady chauffeurs are arranged to drop them
home.
o For other employees there is a drop off and pick up from the nearest
railway stations – Ghansoli and Kopar Khairane.
o A drop home facility is provided to employees who leave after
public transport ceases operation in the night.

4. Over-Production Incentives (over and above CTC):

For employees who work beyond their required 40 hours per week (8 hours a
day, 5 days a week) or who work on weekends are eligible for special over-
production incentives and weekend allowances that equals to 1.5 to 2 times the

32
employee’s salary. These allowances are much higher than the mandatory
over-time salaries prescribed by the State of Maharashtra.

5. Loyalty Bonuses:
Every employee accrues a Loyalty Bonus for every month spent with the
company. Once the employee completes 18 months in the Organization, he /
she starts receiving portions of the accrued Bonus with their Salary. Higher the
employee’s vintage, more is the Bonus Amount paid.

6. Exclusive Rest and Relaxation Facilities:

Employees have exclusive access to use the facilities such as Library,
Gymnasium, Playstation Games and can play indoor sports such as Table
Tennis, Pool, Carrom, Karaoke, Playstation Games, Foosball, Library, etc.

7. Reimbursement of Hotel and Travel Expenses for Out-Station

Candidates:
After confirmation, outstation candidates are provided with a 7 Day
accommodation till they are able to make arrangements for their own after they
move to Mumbai. Travelling expenses are also reimbursed for their travel to
Mumbai.

8. Holidays on Birthdays and Optional Holidays:

Every Employee is entitled to avail an optional holiday on his / her Birthday.
Though the company follows US Holidays due to Business requirements,
employees are eligible to apply for an additional Paid Time Off on Indian
Holidays and Feasts over and above their regular Paid Time Off quota.

33
9. Flexible Work Days:
Employees are allowed to avail Flexible work hours which can start 4.5 hours
prior or after their regular shift timings once a month. This allows employees
the flexibility to come in late to work or leave early before or after weekends
or scheduled leaves.

10. Impromptu contests, rewards and parties:

Employees participate in impromptu parties, contests, Pizza Days, etc. which
are decided at any time. Target based incentives like Ipads are announced for
Top Performers whenever necessary to reward exceptional performances or
achievements.

11. Sporting Events:

Semi Annual Cricket events are organized by the company where the entire
Stadium is hired for exclusive XL Dynamics tournaments. We also conduct
similar events for Football and other such sports at employees’ requests.

34
Company’s Model

35
 Employee Performance Report

Performance Reports:

Performance is tracked on a Daily Basis at XL Dynamics. Through Daily

Performance Report every employee has a clear understanding of his / her daily
work assignments and also how many units of work were accomplished or left
behind at the end of the day. The snapshot below show the achievements as of

36
November 16, 2015 where performance items needing immediate attention can
easily be called out and addressed through the colour controls.

The expected daily productivity of employees is 8 Hours, from a 9 hour work-

day. Those who are efficient in their work often over-achieve this and earn
over-production incentives. These reports are shared with all staff within a
team or process daily. They hence encourage healthy competition among our
staff to outperform and thus grow faster.

Growth @ XLD

37
Watch your potential soar at XL Dynamics. If you’re looking to launch a career
in finance, excel at it @ XL Dynamics. If you are looking for just a simple job,
our opportunities would overwhelm you and leave you behind.

Good English Reading and Writing Skills and Basic Mathematics Skills
are all you need:

The only skills you need to begin a successful career at XL Dynamics are good
English Reading and Writing Skills and Basic Mathematics skills. All other
aspects of your Professional Development are what XL Dynamics trains and
coaches you through the Career Power Path that you would follow once you
are on board.

Initial Training:

Every new comer to XL Dynamics is given basic training about understanding

the Mortgage Industry. This forms the basis for all future process training since
it acquaints the employee with the Industry he / she would be closely working
in everyday at XL Dynamics.

Every employee is evaluated on his / her knowledge and understanding daily

and is moved on to Process Training within a week to 10 days from the joining
date. Simple expectations are set with new joiners and the employee is finally
rated on his / her:

1. Honesty
2. Accountability
3. Customer Service or Customer-centric Skills
4. Communication Skills
5. Basic Algebra
6. Ability to accurately and diligently use a checklist.

Process Training:

38
The Process Training is designed in every function where learning is
incremental and accomplished in small steps. Thus, employees learn a portion
of the process thoroughly, work on active work based on what they are trained
on and then once they are ready, learn a little more complex aspect about the
process. The best minds in the Finance Industry are available to Train you.

Thus every employee is able to be productive and is eligible to earn incentives

on the work they do in very short intervals. When employees meet the
expectations set for movement to the next function, they are automatically
moved forward for incremental training and are now able to handle both, what
they are currently trained on and the new process or complex function they
learn.

Career “Power Path”:

XLD has laid out its Career Management Model to provide complete control
to employees to decide their own career growth. There are seven levels of
growth that every employee would progress through, each giving him / her
growth in responsibility, complex decision making and also a revision in
compensation.

The Power Path is divided into small steps to impart intensive learning to an
employee at each and every step, which helps him or her to become a master
in that particular field. The Power Path helps fully trained and high performing
employees to move from one process to another and progress in their learning
of newer, diverse and complex functions.

It starts with simple functions and moves to Management of Properties, Quality

Control, Portfolio Valuations, Working Capital Management and so on. In two
years an individual will be a Mortgage Industry expert and will be taking
important decisions on behalf of the company.

39
The Company centrally tracks and monitors performance in terms of
Efficiency, Quality and HR aspects. Eligible Employees will be approached
for a transition to the next level.

The moment the employee moves to next level / function, a revision in Salary
is also be applicable. Every employee gets multiple opportunities for salary
revisions in one year based on his / her performance. An employee who
performs reasonably well and meets expectations could have up to 4 salary
revisions in 1 year.

The goal is to assess performance and reward it immediately. Employees who

are not able to perform well in the new responsibility, simply move back to the
previous function they were good at. Once they are ready, they can once again
opt to transition to the complex responsibility.

Employees also have the flexibility of choosing to remain at a certain level or

function as they are content with the work they do. In such cases, they would
remain within the same process / function till they choose to move to a complex
one.

To qualify for a movement to a complex responsibility:

1. An employee must achieve the target productivity with zero errors for 2
months.
2. An employee must demonstrate the right work ethic and a commitment to
achieving superior quality, in turn helping our Client achieve its objectives.
3. An employee must be Honest, Accountable and Professional.
4. An employee is expected to deliver the highest quality of work in all tasks
assigned within the designed time frame.

No Politics – We love everyone:

XL Dynamics strongly advocates “No Politics” at the workplace. No matter

how much an employee gets along with his / her supervisor, this would never
be the basis for anyone’s career progression.

XL Dynamics loves every employee equally and rewards only based on

performance.

40
Early Responsibilities:

If an employee shows the desired performance, he / she can reach their next
career level, i.e. become a Supervisor with 6 months to a year from their joining
date.

Job Security:

XL Dynamics hires, encourages, promotes and secures futures of Individuals

who are Good Performers. Our expectations are that we all work efficiently,
don’t make mistakes and add value to the Business of our clients in whatever
we do.

Being successful at XL Dynamics isn’t that hard. You walk in, get trained for
a short period, perform, move to a higher level in the pyramid, perform and
keep moving up in the Pyramid. Anyone who is dedicated, works hard and is
good in English can do it.

When the stakes are this high and the expectations are clear, low performers
feel threatened about their performances and job stability. We work with our
weakest links and give them the tools and training they need to become
successful. For those that do, they no longer feel insecure, become good
performers and have a bright future ahead of them. The rest move out in search
of conducive environments where quality and performance are not paramount.

Unethical employees or those who are not interested in delivering good

customer service are weeded out from the system. Honest, Customer Centric
and high performing employees succeed rapidly.

41
Competition:

It’s our experience and perseverance that helps us achieve goals that many find
unfathomable. We’re all excelling in our Businesses and at our careers at XL
Dynamics. We are strong and tough when we compete, but are very transparent
and fair. Our sincere coaches and leaders are determined to see us succeed.

42
 Culture @ XLD

“XL” means Excellence and “Dynamics” is a state of constant improvement.

“XL Dynamics” is to constantly improve on excellence.

Our Corporate Mission:

• Find innovative ways that redefine how business is conducted.

• Develop an institution where individual creativity and contribution matters.
• Follow high morals and principles.

The Impetus for our core cultural framework:

Our name and mission are the impetus behind the strong core fundamental
values and the cultural framework that keeps us focused and synergized toward
our goals. They contribute to consistent success, both at individual and
organizational levels.
Our culture gives us the right attitude which has led to our exponential success
over the years.

We put the “Customer” First:

“No Employee is bigger than the Organization and No Organization is bigger

than it’s Customer.” “The Customer pays our Pay check.”
These are the beliefs that we actively follow and implement in at our job. The
Customer is always at the center of all decisions and we work towards
achieving the Customer’s objectives, while meeting our own goals.
We know that it is the customer who truly pays our pay check through the
business they bring us and we constantly re-engineer our processes to ensure
we become more efficient and accurate to offer quicker and better service to
our Clients.

Why does the customer pay our pay check?

43
The fundamental purpose of a job is that when we work, we work to serve
somebody. We serve them and in return they pay us for our service.
At XL Dynamics we’ve made a conscious decision that we will serve
Homeowners in the US, with integrity, passion and pride.

Excellence:

At XL Dynamics, we undertake Business Initiatives with a goal to accomplish

them with Excellence and then to improve on it. We innovate and improve. We
add value to the Businesses of our Clients / Customers, which is a
distinguishing quality of the jobs we do.

Every employee’s excellence and consistent performance allows us the

opportunity to diversify and grow to exponential proportions. We maintain an
environment of openness, encourage freedom to express one’s views and offer
all employees the opportunity to take difficult and important decisions on
behalf of the Organization.

We have a Zero Tolerance for Substandard Quality of work and inculcate

the principle of “Do it right the first time”. This expectation comes from our
customers who expect and deserve nothing but the best for the service they pay
for. Imagine the emotion you feel when you order a bouquet of roses to be
delivered to your mother for Mother’s Day from an online store, but the online
vendor ends up sending her a bouquet of lilies whose pollen your mother is
severely allergic to. Don’t you feel extremely irate and frustrated? Would you
use the online vendor again. This is the same emotion that Clients feel when
they receive substandard service. Providing substandard service isn’t prudent
business and it projects “sloppiness” on the part of the Organization or it’s
employees. Our culture in the Organization is to constantly improve on
excellence which leaves no room for any level of “sloppiness” or substandard
service.

“A+” is the only Quality of Product / Service we expect and accept from our
employees. Anything below this is substandard and will never be delivered to
a Client / Customer. For this we train Employees to a level that they become
Subject Matter Experts in the domain they handle. Each employee who has

44
consistently imbibed and delivered “Excellence” within 3 years has grown to
Head Business Units across the Organization or has been rewarded with
remuneration beyond what the competition offers. There is always room for
improvement in any area of the Business or the Organization or a Process. We
believe and encourage constant improvement and innovation which keeps us
up to date and gives us the competitive edge necessary for growth in the
industry.

Integrity, Honesty and Ethics:

To deliver Financial Services to the Mortgage Banking Industry, these values are
mandatory amongst every employee at XL Dynamics. It is our Moral and Social
responsibility to be honest in all our dealings, both with our Clients and Customers, as
well as with each other.

Being Ethical is simply put, doing the right thing, always. This is practiced seriously
throughout the company. We always operate within the framework of the policies enforced
by Regulators, Government Sponsored Enterprises, Auditors, Investors and other Bureaus
that regulate our operations. Our Managers strive hard to meet our Customers' objectives
and are very successful in being able to help them profit from highly regulated and
restrictive Business, where every act of indiscretion costs hundreds and thousands of
Dollars or closure.

As an Organization, we do not tolerate any violations of our core values of Integrity,

Honesty and Ethics. We ensure these values are practiced everyday at XL Dynamics and
also ensure our Vendors or Third-Parties exercise them in their dealings with us.

We also believe in not “Covering-Up” and accept accountability for the mistakes we make.
We also follow a principle that if we make mistakes, we only make new ones.

Hyper Transparency:

Hyper Transparency means voluntarily sharing one’s mistakes and shortcomings on a task
or project with others in the Team or the Company at large so all can learn from it.

While it’s application has great value through everyone’s immediate learning from
someone else’s mistakes, it is difficult for the individual who presents his / her case study
to reveal the flaws in the work completed by him / her. However, this transparency across

45
all levels and designations in the company helps ensure this is the only time this mistake
is made by anyone in the Organization, which is of greater importance.

We have the courage and the humility to honestly accept mistakes amongst everyone and
focus on the greater importance discussed above.

Logical Decisions:

At XL Dynamics, every employee has the responsibility and the authority to take complex
and logical decisions. The responsibility and authority comes from a robust training plan
which educates an employee to the level of an expert. This empowers us to logically
analyze complex scenarios and take the right decision.

A current and comprehensive Knowledge Base is also a key aid used by employees as a
reference source for Policies, Procedures, Checklists and Case Studies. These are all
conveniently accessible on every employee’s desktop, for quick reference. The
comprehensiveness of the Knowledge Base comes from over 10 years of experience in the
Industry that is effectively documented from time to time.

Accountability and Ownership:

Any task is said to have been done diligently only if it is completed with Accountability
and Ownership. If we do not accept accountability and ownership for what we do, we are
not being honest to our customer. This leaves room for plausible deniability in all the jobs
we do and in the long-run results in the loss of trust and business.

Every employee at XL Dynamics is expected to be accountable to the stakeholder for

every task that he / she accomplishes. He / she claims ownership to ensure the task is
completed within the expected time-frame and with A+ quality of service. This maintains
confidence among clients about the committed products and services we offer, being
delivered as per the expectations.

The individuals that do not believe in accepting accountability or ownership for the work
that they do, are not meant for XL Dynamics. Such individuals believe that a company’s
primary role is to make employees feel as comfortable as possible.

XL Dynamics and it’s staff are successful because we know that our Job is to serve the
customer and make the customer feel as comfortable as possible doing business with us.

We say what we mean. We mean what we say:

At XL Dynamics we do not believe in a culture of making empty commitments or false

promises to our customers. If we commit to a deadline or completion of a Project, we
deliver what was committed in the time-frame committed.

46
When we cannot accept a responsibility for delivery, we say no. We are not intimidated
by challenging expectations and commit to something we know we cannot achieve and
then hope on a prayer that it gets done. We are not ones that fear the immediate
consequences of saying “no”. We rather state our inability and work towards being able
to achieve these expectations in the most effective manner and time-frame, for us and our
clients.

This is why our clients appreciate us and trust us to get the job done.

Stress / Pressure:

We are passionate about delivering the best Service to the Customer. We believe in going
that “extra mile” to make Homeownership a reality for a Borrower. Yes, we do carry the
weight of being accountable, responsible and ensuring that we always deliver what we
commit. That’s what we’re paid well for. When we’ve accepted the customer’s payment,
we’ve emotionally and mentally accepted that we shall proudly serve them. We’re
accountable for the delivery of the Service we’ve been paid for and willingly challenge
our abilities to meet the Customer’s expectations.

Following Checklists:

XL Dynamics believes in the diligent use of Checklists in every process it follows. Each
and every task performed here is done with the use of a checklist to achieve the highest
standard of quality and consistency from every employee. A Checklist is the result of years
of process engineering and research which has gone into making the checklist precise and
robust. Good performers always follow the checklist and following the checklist always
ensures everyone is a good performer.

Checklist designers are at the top level of every process and always work on making the
checklist better to use and accurate.

In an Airplane it is mandatory for a Pilot to go through and complete a comprehensive

checklist in order to ensure maximum safety standards are maintained for passengers. It
does not matter whether the Pilot is flying the plane for the 1st or the 100th time, he / she
still needs to complete the checklist. Should this not be done, it puts the lives of 100s of
passengers at risk.

Similarly in the Mortgage Banking Industry, it is very important to follow the checklist
since a single mistake can lead to losses of up to thousands of US Dollars.

We realize the value of our jobs because we know it’s importance, we understand how it
affects our Organization and Clients and we Profit from the rewards that quality centric,
ethical and effective services bring.

47
Type of Job:

Every job at XL Dynamics requires extreme concentration. Every distraction

is a potential cause for a mistake and mistakes are very expensive as they run
into thousands of US Dollars and above per transaction. We have grown from
55 Employees in the year 2008 to 1000+ Employees in the year 2018.

This company is for the elite few that truly believe that in order to get
anywhere, “you have to do the ground-work before you progress to doing
fancy-work”. It is very important at XL Dynamics to know why you do what
you do, to understand the bigger picture and move up the corporate ladder. The
patient few that believe and practice excellence, reach high levels of expertise
with a lot of success in their careers at XL Dynamics.

We are very selective of the individuals we hire to join us. Only those serious
about their careers and serious about being successful make it through. We are
looking for individuals who are serious about having a privileged career where
their intelligence, aptitude, education and experience would have meaningful
application.

We are looking for the next generation of employees who would create
opportunities for another 3000 employees by delivering very high quality of
work in remarkable time-frames to our customers.

Direct Access to Management:

Any employee can directly approach Senior members of the Organization. The
company follows an open door policy wherein any employee of the company
can approach Management to have their concerns addressed. Managers and
Supervisors do not sit in cabins, but rather in the work-areas with the Team
Members. This makes them easily accessible and approachable. It also ensures
the employees are groomed faster.

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 Leadership @ XLD

Leaders at XL Dynamics understand and inculcate our culture and values in

every employee that they manage. Leaders believe in the Corporate Mission
Statement and the purpose for which the Organization was formed. They
understand the shift in goals from time to time as the Organization grows and
adapt to deliver them as expected.

Leaders aren’t born, but are made. What are the qualities that make a Good
Leader at XL Dynamics?

The sole purpose of the existence of a Leader in XL Dynamics is to

passionately serve the customer.

Leaders in XL Dynamics are very passionate in delivering nothing less than

excellent customer service to our Clients and Stakeholders. They possess the
ability to channel the efforts of all their teams of bright and highly intellectual
individuals, to achieve the Client’s objectives.

They follow “Zero Tolerance for Errors” within the Teams they Lead or
Supervise. The only rating they accept on the delivered Quality of Work is an
A+.

Assertive:

Leaders at XL Dynamics are strong-willed, self disciplined, have the ability to

work on any task assigned to them, whether or not the task is related to their
domain knowledge. All Leaders at XL Dynamics are promoted from within the
Organization.

No-one gets the better of the XL Dynamics Leader. Our Leaders are strong in
their beliefs and set the right expectations from their employees. Our Leaders
appreciate Individual Efforts and reward excellence. They also condone
substandard quality or dishonesty.

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Business Leaders are Business Owners:

Our Leaders run their respective Units like a Business Owner. They are closely
connected with the day-to-day functioning of the Process, set expectations and
drive teams towards achieving them.

They ensure that through constant innovation and reengineering of processes,

the Unit’s production, quality and profitability consistently improve, making
the Unit more efficient and cost-effective. This allows the leaders to obtain
more Business for the Unit and the Organization at large.

Every Business Man / Woman invests him / herself completely in his / her
Business. They are hence able to think quickly and strategize to ensure that
minimal efforts or losses are incurred. Business Leaders thus are Business
Owners here at XL Dynamics.

Innovative decision makers and solution oriented:

Business Leaders at XL Dynamics are empowered with the authority to take

complex and important decisions on behalf of the Organization and the
Employees. Business Leaders do not just look for issues in the process but
rather find innovative solutions to permanently fix them, in a short period of
time.

Every moment is important and time lost causes delay in delivering services to
Clients. Effective and Solution Oriented decision making is thus a very
important attribute of our Leadership Training. After all, “Time costs Money.”

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Achieve objectives with Prudent use of resources:

Through effective decision-making, planning, passion for excellence and

customer service, and running the Business Unit like an Owner, every Business
Leader at XL Dynamics is trained to manage all functions with prudent use of
resources, both “Human” and “Technology”.

XL Dynamics is thus able to offer profitable services to our Clients at

competitive pricing as our Business Processes operate at optimal levels.

Re-engineering and innovation are also instrumental in making functions more

productive and efficient. “Zero tolerance to errors” ensures no wastage of
resources and efforts on corrections and audits since every leader inculcates
the “Do it right the first time.” philosophy with every employee.

Micro Managers:

By being Micro Managers, Business Leaders at XL Dynamics are connected

with the Pulse of the Process and the Employees. Every Business Leader
completes a certain level of production every month on his / her own. This
sharpens the Leader’s knowledge of the process and gives him / her first-hand
experience of the process and feedback on areas of improvement in the process.

This helps in timely identification of issues related to Process, People or

Technology on a real-time basis and they are fixed before they become harmful
to the organization.

Micro Managing also helps when re-engineering and innovating strategies to

make the process robust and efficient.

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 DATA ANALYSIS

Mortgage Process in US:

Information Necessary to Apply a Loan:-

• Personal – Name, date of birth, social security number, addresses for the last two
years, phone numbers, years of schooling, and number and age of children.
• Employment – Two years history including name, address and phone number of
employer(s), positions held, pay structure and beginning and end dates.
• Assets – Bank account information for checking, savings, money markets, CD’s,
brokerage accounts, IRA’s, and 401K/403B retirement accounts. Account numbers
are not necessary upfront for the initial application.
• Liabilities – we will obtain your credit report and our software facilitates the transfer
of all of your outstanding monthly obligations directly into your application. We will
then verify the accuracy with you directly. Most, if not all of this information is stored
in your head!

Factors Impacting Loan Approval:-

• Credit Score – Credit Scores will have a huge impact on what rates are offered for a
conventional loan. The government agencies, Fannie Mae and Freddie Mac have
come up with a risk based scoring system that provides for adjustments to the interest

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 rates for those with lower credit scores. In addition, you put down less than 20% and
require mortgage insurance, these premiums are also tied somewhat to your credit
score. If you are doing an FHA or VA loan, you may qualify with a lower credit score
without a negative impact on the interest rate you are offered. In general, if you score
is less than 680, you most likely will be better off going FHA or VA because you will
be offered a much better rate even though the mortgage insurance will be more
expensive.
• Debt to Income Ratio – There are two ratios that a lender will be interested in; 1)
your housing ratio, also known as your “front end ratio,” and 2) your debt-to-income
ratio, also known as your “back end ratio.”
The housing ratio is your total housing payment divided by your gross monthly
income (your income before taxes are deducted). Your total housing payment includes
principal, interest, taxes and insurance.

Your debt-to-income ratio is calculated the same as the housing ratio, except all
revolving and installment debt is added to the housing payment and divided by your
gross monthly income. Revolving and installment debt can include credit cards,
student loans, car loans, personal loans, etc.

Ideally, these ratios should be less than 35% for the housing ratio, and less than 45%
fpr the debt-to-income ratio, although today some loans are approved with a borrower
having a ratio as high as 55%.

• Monthly Income - Monthly obligations that are counted against you when
qualifying for a home loan include credit cards, student loans, (even if
deferred), auto loans, personal demand loans, and any other revolving, or
installment loans. For credit cards, your “minimum monthly payment” will be
what they use to qualify you on conventional loans.

Items that do not count against you are insurance, (medical, auto, life) utilities
and other personal expenses. In addition, installment loans with fewer than 10
payments remaining can be excluded for qualification purposes.

• Employment History - This is a big factor in qualifying for a mortgage.

Generally speaking, your lenders will want to see your last 2 year history. The
big issue here is how you are paid. If you are on a straight hourly wage or
salary and paid as W-2 employee, it is fairly straight forward. You will qualify

53
 off that income. If you have changed jobs recently, this is typically not a
problem.If you are paid a base salary plus bonus and/or commission it gets
trickier. You must have a two year history of receiving bonus and or
commission before you will be allowed to count it as income. Same goes for
those that are paid 100% commission; you must be able to provide 2 years of
tax returns showing the receipt of such income.

If you are paid as a contract employee, 1099 income or are self employed, you
have the same requirement. You must be able to prove 2 years of history
before you will qualify. The lender will be looking for copies of business
licenses or your CPA to write a letter saying that you have been self employed
for the last 2 years. The income they will use to qualify you is the net income
you report to the IRS after your deductions.

Loan Programs:-

• Renovation Loans

When you are purchasing a home that needs work, FHA offers what is called a
streamline 203k renovation loan. Essentially it provides up to $30,000 towards
improvements. The trick is that you need to factor in enough time to get
contractors involved to provide a scope of work and pricing. This typically has
at least a 60 day time frame.

• FHA/VA Loans

FHA and VA loans are backed by the federal government. FHA loans are
insured by the Federal government and are available with very small down
payments. There is a fee for doing these loans called an upfront Mortgage
Insurance Premium (MIP) equal to 1.75% of the purchase price of the home
and in addition, you pay a monthly MIP premium to insure the mortgage
against default. These loans make sense for a small percentage of people who
are credit challenged or lack the required 5% down payment for a
conventional loan but you should exhaust all of your other possibilities to
avoid paying the 1.75% fee first.

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 VA loans are guaranteed against default by the federal government and are
available up to 100% of the purchase price for eligible veterans.

• Fixed vs. Adjustable Rates

Fixed Rate Loans

These loans are fixed for the term of your loan. They are amortized over the
period of time you select, so the shorter the period the larger the monthly
payment will be. Also, the shorter the time period you select the more
significant the interest savings will be over the term of the loan. But one note
of caution is that you should make sure that you are comfortable with
whatever period you select, i.e. if you select a 15 year fixed you can’t go back
to a 30 year later if let’s say you loose your job. Generally there is a slightly
better interest rate offered for the shorter term loans.

Adjustable Rate Loans

Adjustable Rate Mortgages, or ARM’s, differ from fixed rate mortgages in

that the interest rate and monthly payment move up (or down) as market
interest rates change.

Most Adjustable Rate Mortgages have an initial period where the interest rate
is fixed, followed by a much longer period during which the rate changes at
preset intervals. The rates charged during the initial periods are generally
lower than the rates found on comparable fixed rate mortgages. The initial
fixed rate period can be as short as a month or as long as 10 years. Five-year
ARM’s are the most common, though the so-called hybrid Adjustable Rate
Mortgage has become popular in recent years.

These hybrid Adjustable Rate Mortgages — sometimes referred to as 3/1, 5/1,

7/1 or 10/1 loans — have fixed rates for the first three, five, seven or 10 years,
followed by rates that adjust annually thereafter. After the fixed rate
honeymoon, an adjustable rate mortgage fluctuates at the same rate as an
index spelled out in closing documents. The lender finds out what the index
value is, adds a margin to that figure, then recalculates what the borrower’s
new rate and payment will be. The process repeats each time an adjustment
date rolls around.

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 Mortgage Process in India:-

Eligibility for Mortgage Loan

To get approved for a mortgage loan, you need to fulfil the eligibility criteria set by
banks and financial institutions. While the criteria may vary from bank to bank, listed
below are general factors that determine your eligibility:

• Gross annual/monthly income

• Minimum age requirement of 21 years
• Valuation of your property
• Income proof documentation
• Existing liabilities
• Number of dependants

Whether you’re salaried or self-employed, you’re eligible for a mortgage loan.

Documentation Required

The documentation required for the loan application varies based on your employment
status i.e., self-employed or salaried.

If you’re a salaried individual, listed below are some documents you may be asked to
submit:

• Duly filled loan application form

• Passport-size photographs
• Identity proof (PAN card, Aadhar card, passport, driving licence, voter ID card, etc.)

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• Address proof (electricity bill, ration card, Aadhar card, driving licence, rental
agreement)
• Latest salary slips
• Form 16 issued by employer
• Latest bank statements
• Processing fee cheque

If you’re a self-employed professional/individual, you may be required to submit the

following documents:

• Duly filled loan application form

• Passport-size photograph
• Identity proof (PAN card, Aadhar card, passport, driving licence, voter ID card, etc.)
• Business proof
• Financial statements for the last 3 years
• Latest income tax return certificates (last 3 years)
• Profit and loss statement (P&L)
• Latest bank statements
• Cheque for processing fee

Things to Consider Before Applying for a Mortgage Loan

Before you decide to opt for a mortgage loan, there are certain factors you need to
evaluate. Let’s find out what they are in the section below:

• Loan amount: For a mortgage loan, you’re required to submit your residential or
commercial property as collateral. The sanctioned amount depends on the metric
value of your property. Most banks and financial institutions have a 40% to 60%
margin. Other factors that are taken into account are the property’s condition as well
as the age.
• Interest rate: Depending on the lender, you may get interest rates anywhere between
11% to 15%. You can choose to get a floating rate loan or a fixed rate loan.
• Fees and charges: Processing fees, documentation charges, application fees,
property inspection fees, loan overdue fees, late payment penalties, loan conversion
fees—these are just some of the charges you need to take into account. These fees
can increase the cost of your loan.

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• Tenure: The repayment period offered by lenders can go up to 15 years. However,
if you’re choosing an overdraft facility for your mortgage loan, the tenure may be
much lower.
• Repayment schedule: This also differs from bank to bank. While most banks offer
an EMI option for the mortgage loan, there are other repayment options available too.
It’s important to clarify this with your lender before getting the loan.
• Eligibility criteria: The criterion for the loan changes on the type of employment,
your residency status, your income, your age, among other factors. Always check the
criteria with your lender before applying for the loan.

How to Apply for a Mortgage Loan in India?

You can apply for a mortgage loan through the bank’s official website or by visiting
the nearest branch. For an online application, go to the lender’s website and choose the
product you wish to apply for. If they entertain online applications, you will find an
‘Apply Now’ option on the page. Depending on the process, you may have to fill an
online application form and submit the details.

You can also go to the nearest branch, request for an application, and submit it along
with the required documents.

The application process for a mortgage loan:

• Document collection to process the loan

• Credit appraisal by the bank
• Verification of personal/business information provided
• Sanction letter delivered via post and email post approval
• Request for disbursal
• Property documents collection
• Evaluation of your property and its documents
• Post successful verification, disbursement cheque delivered

Features and Benefits of Mortgage Loan:

A mortgage loan comes with the following attractive features and benefits:

• It is a cost effective way of borrowing. Normally, you can take a mortgage loan for
a longer duration and pay off your repayment by using smaller monthly EMIs.

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• Mortgage loans charge lower rates of interest on your borrowings than any other
loans.
• Mortgage loan is a secured loan. It is secured against your property. The bank or
lender has the right to repossess your property if you can’t repay your loan.
• A mortgage loan helps you buy your own house. You can afford to buy a home with
the help of this loan and be the sole owner of your property once repayment is over.
• You can get loans against under construction property, fully constructed property,
freehold residential and commercial properties for:
• Get loan for a longer tenure.
• Repay your loan with a simple repayment process through monthly instalments. You
can pay it off by paying smaller monthly EMIs.
• Mortgage loans are offered at attractive interest rates.
• Enjoy an easy and hassle free documentation process.
• You can get a mortgage loan anywhere in India with integrated branch network
provided by banks.
• You can choose from a number of interest rates to pay off your loan. They include -
floating rates, fixed interest rates, interest-only mortgage and Payment option ARMs.
• Get access to a higher amount of funds.
• Mortgage loan can be sectioned even before your select your property.
• You can apply for it both online and offline and enjoy doorstep services.
• Both residential and commercial properties are accepted as collateral for mortgage
loan.
• Funds received from a mortgage loans can be used for business as well as personal
needs.
• Self –employed individuals get customized loan options.

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 Interpretations

From the above prepare report we come to the understanding that the
Operational aspect of Mortgage Process is as follows:-

Figure: Mortgage Management Process in an Organization.

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 Conclusion

FINDINGS

• The mortgage industry of the United States is a major financial sector. The federal
government created several programs, or government sponsored entities, to foster
mortgage lending, construction and encourage home ownership.

• Providing home to every citizen of country is main goal of US government.

Currently homeownership rate in USA is 80%, while India has only 32%

USA 80%

India 32%

Homeownership Rate

• In US Mortgage payment include Principle, Interest, Taxes & Insurance (PITI)

however in rest of countries mortgage payment include only Principle and Interest.

• There several Banks, Non-Banks and Credit Union which provide mortgage to
borrower. As per current data Mortgage originated by Bank in US is 40% and in India
Housing loan provided by Bank is 75%, while mortgage provided by non-banks in US
is 51% and in India it is only 20%

USA India
Bank 40% 75%
Non-Bank 51% 20%
Credit Union 9% 5%

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Mortgage Origination by Institution Type

• Mortgage interest rates are generally fixed or variable. As per current data mortgage
originated with fixed interest rate is 95% and with variable rate is only 5% while in
India Housing loan with variable rate is 75% and with fixed interest rate is 25%.

USA India
Variable Rate 5% 75%
Fixed Rate 95% 25%

Fixed Rate vs Variable Rate

• As per data current mortgage interest rate varies from 4-5% in US and 8-9% in
India.

Country Interest Rate

USA 4-5%
India 8-9%

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 Bibliography

The data is collected from the lists of book and website given below.
• http://www.knowledgesplice.com/Mortgage.aspx
• https://www.mortgagepolicymanual.com.
• https://www.outsource2india.com/mortgage/case-studies/
• https://www.familyga.com/first-time-home-buyers.
• https://www.bankbazaar.com
• https://www.rbi.org.in/
• The ABC of Real Estate.
• The Mortgage Encyclopaedia.

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