1. Lack of Loan Process Transparency
Most lenders have a loan officer who hands your initial loan package to an analyst or underwriter over whom you have very little control. Typically, your package just disappears behind a hidden bureaucratic wall, leaving you to wait and wonder about the disposition of your loan package.
Solution: Built on the concept of Transparency, Capital Development has developed the optimal paradigm to manage the 65+ documents that make up a typical commercial loan package. Employing a proprietary and secure online document management system called eDocLending(TM), we scan each document and set up your loan package online, so you or your borrower can directly access a Tracking Page. This page instantly reveals
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3. Generic Loan Proposals
Regrettably, many lenders issue generic proposals or term sheets with an unrealistic rate quote due to deficient pre-screening requests. After investing your client 's time and money in underwriting, the terms provided at funding are less attractive. This traps you and your borrower into a high cost, low value loan package. It 's dangerous to engage a lender who issues anything less than a proposal based on an accurate analysis.
Solution: Pledging transparency and integrity, Capital Development provides detailed Pre-Approval Letters with terms and conditions that carry through to closing. Selecting a lender should be based on the final terms and conditions the borrower will have to live with, especially given the long-term nature of permanent financing. Capital Development is a high-value lender defined by wholesale loan programs and interest rates, coupled with the deep commitment to close your loan as advertised.
4. Vague Timelines or how "Time Kills Deals"
Closing by an agreed-upon deadline should be equally important to everyone involved. Unfortunately, committing to a deadline is almost impossible for most lenders. This is because their internal communication is limited, and they must rely on people within their organization over whom they have no control. While delays typically only minimally impact a lender, even slight delays can be catastrophic to a borrower. Here 's the often too-familiar
Analysis and evaluation stage is a single channel, interest rate multi channel, loan terms single channel, and final issuing a multichannel. (Exhibit A)The current structure of the analysis and evaluation stage does not maximize staff time effectively and as a consequence creates a bottleneck in the process. With the single channel structure loan applications are unevenly distributed among teams and create higher idle time for teams with less volume of loan applications to process. Utilization among regions varies greatly between 73% - 95%. The following observation of the current structure was achieved using the MMK model (See exhibit B):
Capital One was founded on the vision Richard Fairbank and Nigel Morris had regarding the potential profitability that could be made from customizing credit card products based. “Capital One now is one of the largest issuers of master card and visa credits in the world.” Recently, due to a new marketing campaign, Capital One predicts an increase in demand for fund loan approval. Based on the current levels of capacity, the loan department will not be able to accomplish their targeted goal of 700 applications per month. Our proposed plan is aimed at accomplishing a higher level of utilization and capacity through modifications on the current loan approval process. Since
They keep the needs of the borrower in their mind at all times, rather than focusing on their own profits, and they take into account the nature of the purchase. Is the home worth the money being borrowed? If not, Mike and Brian will explain this to the client and clearly show why this is the case.
Speidel, R. E., Summers, R. S., & White, J. J. (1993). Sales and secured transactions: Teaching materials. St. Paul, Minn: West Pub.
Transparency is essential in a market based system, but is not necessarily a requirement for a bank-based system. In a bank based system, banks have long-standing working relationships with the companies seeking financing, and banks have on-going access to information about the firm. In a market based system, creditors and equity-holders require that financial information about companies seeking financing be available, sufficiently detailed and accurate if they are to participate in the market. This information, including audited financial statements, allows participants in the market to make
Through the use of false promises and sneaky sales tactics, borrowers are convinced to sign a loan contract before they have had a chance to review the paperwork. If the borrower is allowed the chance to go over the fine details of the contract, a significant amount of the borrowers targeted by predatory lenders haven 't been updated enough to really understand what they are signing. In most cases, sub-prime borrowers do not hire attorneys to represent them. They either don 't have the cash flow to do so, or they are not made aware of the opportunity. An example of the predatory lending practice of high interest rate financing is as follows:
As competition increased between savings and loans, banks, and credit unions, banks were eager to attract loan applicants in order to increase revenue and compete with other financial institutions. Jack S. Light, the author of Increasing Competition between Financial Institutions, said in his book that “commercial banks are diversifying their assets toward higher percentages of mortgages and consumer loans, and thrift institutions are seeking authority to diversify their loan structures. Moreover, mounting pressures are working toward, and have partially succeeded in, changing the authority of thrifts to include third-party payment accounts similar to commercial bank demand deposits.” (Light) Because of this eagerness to bring in new clients, they were willing to give out loans without checking into the financial stability of the borrower or the business that was requesting the loan. Unfortunately since the banks didn 't look into their clients’ financials adequately, many clients defaulted on their loans because they could not afford the payments, especially when balloon payments started.
Anyone can be a predatory lender, just because one is dressed in a nice fashioned suit does not necessarily imply that they have a career or in this matter be willingly helpful people. A face can be as deceitful as the clothing of a person. In the article “Predatory
Please provide clarification with respect to the attached disclosure. Specifically, pursuant to the regulation requirement below and how the disclosure is delivered to the borrower. Is the disclosure delivered via secured email and is there a process in place wherefore you receive confirmation once the borrower is in receipt of the disclosure? Please advise.
A brief history into its creation is when this all began when the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was put into place July 21, 2010 by President Barrack Obama, in order to combat the Great Recession. This act requires the Consumer Financial Protection Bureau (CFPB) to issue rules and systems that organize certain disclosures provided to consumers when applying for and closing a mortgage loan under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The Truth in Lending Act (TILA) was brought into effect May 29, 1968 as a United States federal law, which was designed to promote informed use of consumer credit, by requiring disclosures about its terms and cost to standardize
These boomerang buyers represent a wave of potential pent-up demand in the housing market that could reshape the housing market. However, so far less than half of recently eligible borrowers have purchased a home. There are several possible reasons for this: they may believe they are not eligible even if they are, they may be reluctant to seek
Good morning Kona , I'm concerned that the underwriters aren't going to know my true accessible "cash" net worth based on the forms we signed yesterday. As I'm sure it is with all your clients this is a very important to Carol and I. We planned to put down up to $250k not the $168k noted on the form so the true net loan amount would be $313k and not $394k
We often come across applications that don’t look well put together, and some applications just look too squeaky clean. If there aren’t any false we assume there is a lot of false information in that application. As a loan officer you have to make decisions that are reasonable. Making decisions means weighing information and coming to some conclusion that we feel will maximize our outcome (King 2014). A good loan officer shouldn’t just process a loan for the money. We expect to see files that seem reasonable and would help Gateway Group gain a good reputation. There are two types of loan officers, ones who are greedy for money and will take any file without doing research or a loan officer that prefers to do a file the right way without pulling any stings. A business profession should want to be known for having successful and stress-free closings. Anthony takes the time to analyze and help his borrowers complete a pre-approval process. Justin just takes information over the phone and tell applicants that they are pre-approved without submitting an application to underwriting.
As technology improves, the wide use of “hard information”, such as the borrower’s credit history, reduces informational asymmetries. Therefore, long-distance small business lending is easier (Frame, Srinivasan, \& Woosley, 2001; Petersen \& Rajan, 2002). However, even with the use of credit score data, collecting ``soft information" still helps local lenders control risks to avoid delinquency (DeYoung, Glennon, \& Nigro, 2008) and provides informational advances in offering more favorable rates (Agarwal \& Hauswald, 2010).
Often a loan is brokered, meaning that the borrower is evaluated by a third-party who then proposes the loan request to a number of different lenders. These lenders are chosen based on their likelihood of accepting the particular borrower, and may negotiate small changes in the terms to attract the borrower if they find her desirable.