Out-Sourced Loan Underwriting
Commercial Loan Credit Departments have always felt strong demands from Bank management and the lending team. There are always plenty of growth goals in place, and in order to meet those growth goals lenders need to process more loan requests. Due to increased management and regulatory scrutiny, a smaller percentage of loans tend to get approved in this market, increasing the workload for Credit Departments to accomplish the same volume on new loan business. In addition, increased regulator scrutiny has created more detailed underwriting and reporting standards, increasing the amount of time each underwriter needs to be spend working each request. Lastly, more detailed on-going monitoring and reporting requirements for existing commercial loan portfolios have impacted the time Credit Departments have available to process new loan requests.
Due to the increased demands placed on Credit Departments, most institutions are finding it harder to provide their customers with quick turn-around times and responses, and they are finding it harder and harder to get all of the work done within existing staffing levels. Unfortunately for most institutions, increasing staffing levels in the credit area is viewed as an un-reimbursable expense. Furthermore, finding qualified and hard-working underwriters is becoming harder and harder, and although some Bank’s like to train new underwriters internally, it often means those underwriters don’t have much experience and the quality of work might not measure up and will either require experienced staff spend more time or the institution risk increases in borrower defaults and regulator action.
Commercial Lending X (“CLX”) provides Out-Sourced Underwriting Solutions that can help most institutions resolve many of the issues their Credit Departments face. Whether it is underwriting new loans, renewing existing loans, or reviewing existing loan relationships, the experienced staff at CLX can step in and manage the process for institutions in needs. The benefits of using CLX for loan underwriting include the following:
- When a Bank needs to provide quick responses to customers, is over-loaded with renewals, or is trying to get reviews done before an audit, using CLX provides a means to get a quick solution to the institutions underwriting needs.
- When there are loans that require expertise existing credit staff might not have, (such as for a special-use property as a hotel, mobile home park, type of medical practice, etc.), CLX can provide an experienced underwriter with knowledge to complete the underwriting for that request.
- Institutions no longer need to hire additional underwriters for short periods of time, reassign existing staff, or hire temporary employees with less experience to complete short-term needs. Institutions can maintain a minimum staffing level they need to manage their portfolios, and utilize CLX to handle all over-flow underwriting they might have.
- Use of CLX Outsourced Underwriters does not require any investment in technology, office space, computers & equipment, or really any other support services from the institution. All costs are incurred by CLX.
- The underwriters used by CLX have extensive experience in commercial lending and include experience credit analysts and credit managers. Each loan is not only underwritten by an experienced credit analyst, but is also reviewed by an experienced credit manager.
- CLX can utilize the Bank’s existing presentation form or can provide their own detailed form for underwriting each institutions loans.
- CLX will make recommendations and work with institutions to enhance their existing presentations forms to best meet the current best underwriting practices.
- CLX will work to learn each institutions underwriting demands and tastes, and be sure each presentation conforms with those tastes.
- The cost to utilize CLX underwriting is typically a flat fee set for each new loan, renewal, new loan with renewal, or annual review, so management knows what the cost is and can easily compare it with their internal cost structure. Furthermore, it gives institutions a defined cost for their underwriting, making it easy to pass on the expense to the Borrower as an underwriting fee should a lender chose to do so.
There are many benefits to utilizing CLX for your underwriting needs, and we encourage you to give us a shot. We will underwrite several loans for free to show you what we can bring to the table.
Our process for underwriting your loans is simple, and includes the following:
- The necessary documents are scanned or faxed and then uploaded to CLX via our secure uplink. Necessary documents typically include financial information (including historical financial information if this is a new request), credit reports, D&B reports, a brief description of the request, any past loan presentations or write-ups for that customer, and any other pertinent documents including copies of appraisals.
- Upon receipt of a complete financial package CLX staff will underwrite the loan and put it into either the Bank’s presentation format, or CLX’s format based on the institutions preference.
- Once underwriting is completed, the request will be reviewed by a CLX Credit Manager and will then be forwarded to the institution once all necessary changes are made. Typical turn-around time is 48 hours for all requests, although from time to time questions arise or a complicated loan request may take longer to process.
- CLX will complete all general loan underwriting and the completion of the presentation, including recommendations, credit risk grading, and final conclusions. However, it will be up to the individual institutions to complete a final review and insert appropriate lender comments and background information not provided to CLX. If any errors are round in the review by the institution, the presentation will be returned to CLX and CLX will make corrections immediately.
- Once underwriting is completed and the loan request has completely gone through the review and approval process, CLX will delete and destroy copies of all financial information printed or saved for that loan request, and that information will be eliminated from the CLX system, giving the institution additional protection and security on financial information provided.
- CLX typically bills institutions monthly for the underwriting performed in the previous month, and invoices are typically based on the number of type of files underwritten, and not on hours worked.