Loan Underwriting Decisions

Every loan proposal will create due diligence with final approval during underwriting. While nobody wants to be “examined”, or have to answer uncomfortable questions, let’s defuse the issue, by considering how to be prepared, the actual process, and results. Make the process of underwriting a loan proposal our friend.

Do not assume that because you understand the loan proposal, the lender will reach the same conclusion! We need to anticipate the opportunity of objection! All our lives filled with objection. Each a focal point. The beginning of the answer “yes” or “no” or “maybe”. To get control invite objections. Anticipation, means we subject our project and the loan proposal to a hardline evaluation introspectively. Now you know the questions and can prepare persuasive rebuttals. A principle management member, as a spokesman, has tremendous articulation and impact on an underwriting decision. Before we approach a lender, we will have done our own internal underwriting. We have assumed objections and prepared answers to them, in advance. Bear in mind there are no loan proposals for which there are no objections! In fact, there are experts who design and “plant” objections! If you plant objections, which you can directly focus on, easily overwhelm, and possibly avoid objections, which are less obvious, and more difficult to defend. Our goal is to guide the underwriting decision.

Beginning the underwriting decision all the effort, and the support are in the early stages of the loan proposal. A designated loan officer can be a big help. He or she, should have an understanding of the borrower, the business and real estate involved. The loan officer is your contact who prepares the lenders internal documentation is your access for defending objections. I have found that most loan officers are hired to provide a warm reception to incoming borrowers. Not equipped to carry the loan proposal forward. It’s to our benefit. Our loan package is made by fire, will stand on its own, and make its own statement.

If a loan proposal is dis-approved, you must dig deeper into the reasons why. Because it will force you to construct a better loan proposal for the next application. Remember the application process is not a condemnation of you or the loan proposal, It is very possible that the loan might have been approved some weeks ago and might be in the future. Lenders all have internal struggles which they are subject too. Concentration of Credit, low reserves, regulatory discipline. Saying,”that the loan is inconsistent to their strategy” might be as close as you can get to the truth. Not all lenders will have same criterion. Persistence is a consummate virtue. The key, is to find out if there is some objection we overlooked? So it can be corrected. Before we make application again, and make the same mistake. All lenders do not have the same guidelines, made the same mistakes, or have stringent capital requirements.

Loan proposal’s approved with conditions, are negotiable. By interacting with this lender, you might find this alternative acceptable. Resist going to a different lender. Until I was absolutely,sure, that any negotiation with this current lender, would result in an unsatisfactory conclusion. Be prepared, if you walk away, only to return later on. The previous loan may be unavailable, be withdrawn, or be subject to re-approval under new, different, and possibly unfavorable, circumstances. The borrower now is desperate and dateless.

In conclusion, I point out that Thomas Edison said that, ” inventing was 10% inspiration, and 90% persistence”. Not all lenders are prospects to provide financing to your loan proposal or project, persistence is the answer. The sizzle is the qualified business, its plan and its prepared presentation, which provides the inspiration

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