Loan origination
Beginning of a loan process
From Wikipedia, the free encyclopedia
Loan origination is the process by which a borrower applies for a new loan, and a lender processes that application.[1] Origination generally includes all the steps from taking a loan application up to disbursal of funds (or declining the application).[citation needed] For mortgages, there is a specific mortgage origination process.[citation needed] Loan servicing covers everything after disbursing the funds until the loan is fully paid off.[citation needed] Loan origination is a specialized version of new account opening for financial services organizations. Certain people and organizations specialize in loan origination, such as mortgage brokers and other mortgage originator companies.[citation needed]
There are many different types of loans. Steps involved in originating a loan vary by loan type, various kinds of loan risk, regulator, lender policy etc.[citation needed]
Computerized loan origination (CLO) services include Shelternet (by First Boston), LoanExpress (by the Planning Research Corporation[2]), Rennie Mae (by the American Financial Network), and Mortgage Power Plus (by Citicorp).[3] Although computerization did initially face some opposition, in accordance with the electronic markets hypothesis (EMH), it had not led to a fundamental shift in the home mortgage industry by the 1990s.[3][needs update]
Roman Inderst suggested in 2009 that loan origination takes time and effort from loan officers.[4] As a result, higher competition leads to a shift from soft-information to hard-information lending, as well as to the use of credit scores.[4] Similarly, Bedayo et al. (2020) found that, in Spain, loan origination time gets shorter when VIX (a measure of market volatility) is higher.[5]
