Simple hacks to craft the ideal loan origination system workflow

Each form of loan will have a unique approval procedure, which may be human or automatic. When it comes to loan origination, lenders have a “secret sauce” that they never want to divulge since this is what sets their businesses apart from the competitors.

You may create the optimum loan origination system workflow using the simple hacks that SMARTOSC Fintech will demonstrate in this post.

Pre-Qualification Process

The loan origination system workflow begins with this. The prospective borrower will now be given a list of the things they must present to the lender in order to be approved for a loan. This could comprise:

• Voter identification, AADHAR, and PAN cards are acceptable forms of identification or address verification.

• Bank statement and previous loan statement; • Credit score; • Current Employment Information, including Salary Slip;

Loan Application

This comes after the first step of loan origination. The borrower completes the loan application at this phase. This application may occasionally be sent on paper, but today’s lenders are moving toward an electronic form, making this stage paperless. 

With the help of new technology, applications may now be submitted online or through mobile apps, and the data gathered can be tailored to certain loan origination system workflow.

Application Processing

The credit department receives the application at this point, and the first thing it does is check it for accuracy, sincerity, and completeness. The application will be returned to the borrower or the credit analyst, who will get in touch with the borrower to get the information that is missing if all the mandatory fields are not filled out.

Underwriting Process

The underwriting procedure starts after an application is fully submitted. The lender now evaluates the loan origination system workflow while taking into consideration a number of factors, including credit scores and risk scores, and many lenders create their own unique scoring criteria that might be specific to their business or sector. 

Credit Decision 

The outcome of the underwriting process will determine whether an application is approved, rejected, or referred back to the originator for more details. There may be an automated modification in the parameters, such as a smaller loan amount or changing interest rates if certain criteria don’t fit the rule engine specified in the loan origination system workflow.

Quality Check

The quality check phase of the loan origination process is crucial for lenders since lending is heavily regulated. The quality control team receives the application and reviews key factors in comparison to internal and external laws and regulations. The application is being reviewed for the last time before loan origination system workflow.

Loan Funding 

After the loan agreements are completed, the majority of loans finance quickly. Loans against property, business loans, second mortgage loans, and lines of credit could need more time due to regulatory and legal requirements. LOS can monitor funds and make sure that the appropriate papers are signed before or concurrently with funding.

A loan origination system workflow is a system that takes a completed loan application and oversees the loan process from beginning to end. LOS systems may incorporate components like records management, compliance tools, pricing and eligibility engines to lower risk and enhance loan production quality. Do not hesitate to contact the experts at SMARTOSC Fintech if you have any questions about fintech.