The loan origination is the process by which an individual makes an application for a new loan and the lender processes such a request. The lender in this case may be a bank or any other financial institution. The process of loan origination will basically include all the steps especially from when the loan application is made to when such a loan is actually honored and disbursed. Dishonoring of a loan request made by an individual may also be included in the steps of the loan origination process. The process of loan origination will in most of the cases depend with the need for such a loan. For example, the loan origination process for a mortgage may be different from that of business.
The loan origination process may be accomplished using a number of channels. Among the common channels which are used for the purpose of completing the loan origination process may be the use of brokers, the agents, self-service and also through the online application. Most of the financial institutions are today leveraging on the use of the loan origination systems. The loan origination system is the system which has been developed specifically for the purpose of supporting the application process of loans. Identification of the borrower, processing the information and carrying out the vetting for the credit worthiness of the borrower are some of the tasks which are carried out by the loan origination process. The system will also carry out the documentation for the origination process and then approve or disapprove the loan application. When the origination system honors the loan application by the borrower, the disbursement of the funds to the borrower will then follow. Where the loan application has not been honored by the loan origination system, the disbursement of funds will not be made to the borrower.
To the financial institution which chooses to leverage of loan origination system, there are a number of benefits which they enjoy. The loan origination systems offers a variety of solutions to most of the business needs bearing that such needs are dynamic. The system gives a financial institution a chance to render it services with minimal costs. To the side of the bank, the costs are in most of the cases cut. The fact that the origination process is also automated makes the decision making process to also be faster. The process of monitoring the loans which have been approved is also efficient. This is so since the systems also provides the real time solutions for loan monitoring. Other benefits may include the increased transparency, flexibility and best customer service due to improved response time.