Loan origination
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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]
See also
[edit]References
[edit]- ↑ Kopp, Carol M. (29 December 2024). "Origination: Definition in Finance, Loan Process, and Requirements". Investopedia.
- ↑ Young, Gayle (1984-04-07). "Computer Firm To Help Buyers Shop for Loans". The Washington Post. ISSN 0190-8286. Retrieved 2026-05-10.
- 1 2 Hess, Christopher M.; Kemerer, Chris F. (1994-09-01). "Computerized Loan Origination Systems: An Industry Case Study of the Electronic Markets Hypothesis". MIS Quarterly. 18 (3): 251–275. doi:10.2307/249618. ISSN 0276-7783.
- 1 2 Inderst, Roman (2009). Loan origination under soft- and hard-information lending (Report). IMFS Working Paper Series.
- ↑ Bedayo, Mikel; Jimenez, Gabriel; Peydró, José-Luis; Sánchez, Raquel Vegas (2020). "Screening and Loan Origination Time: Lending Standards, Loan Defaults and Bank Failures". SSRN Electronic Journal. doi:10.2139/ssrn.3742006. hdl:10230/52775. ISSN 1556-5068.
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