Loan Origination
Loan origination refers to the end-to-end process of a borrower applying for a loan, the lender assessing the application, and the loan being approved and disbursed. It involves collecting borrower information, assessing creditworthiness, negotiating terms, and ensuring regulatory compliance before funding the loan.
Credit origination, Lending process
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LOS (Loan Origination System)
Examples
When a small business owner needed financing to expand, they went through the loan origination process with their bank, providing financial statements, business plans, and other documentation to be assessed for a term loan.
FAQ
What are the key steps in the loan origination process?
The main steps include pre-qualification, application, documentation, underwriting, approval, closing, and funding. Specific steps may vary by lender and loan type.
How can technology improve loan origination?
Loan origination software can digitize and automate the application, document collection, underwriting, and decisioning steps - reducing manual work, minimizing errors, and accelerating processing times.
What compliance considerations are there in loan origination?
Lenders must ensure they adhere to various regulations in loan origination, including fair lending laws, KYC/AML requirements, consumer protection regulations, and secure data handling. Compliance is a critical component of the process.
