Loan Origination Process
The commercial banks and financial institutions offer loans to those clients who meet their define criteria. It is not mandatory for banks or FIs to grant loans on very request. To make it familiar for clients, Banks /FIs developed a process in which clients can submit their proposals. This process is called “Loan Origination Process.”
When a client forward loan request to bank or lender for approval, bank/lender start working on this proposal to analyze that whether this proposal is fruitful for lender or not. After conducting all working, lender finally arrived in a position to take decision of approval. This whole process is called Loan Origination process. Loan Originated process is difficult process and even more complicated in Mortgage loan. This is because; every lender has its own Risk Management policy that allowed lender to take appropriate risk. To alleviate the risk level, lender adopt hazard free process that not only help lender but also convenient for clients. But unfortunately, it is becoming more and more complicated for clients.
At start, client forward formal application to lender along with different required documents like depository relationship statements (Bank statements, salary statements etc), Salary details or business appraisal and any other document that lender deem required. Banks / lenders have amiable staff that thoroughly analyze the application and conduct different verification to check the authentication of documentation. They also obtained credit score of application and find out the risk area. After all these calculations and findings, they take the decision of approval or rejection. Normally, lenders/banks required clients to lend the funds, that is why, the rejection rate in commercial banks is very nominal. Once proposal is approved, it forward to their document department that retain the file in their save custody and transfer the funds to client.
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