What a loan origination system actually does: inquiry to funding in six stages

The six stages every private-lending file passes through, and where the hand-offs between them quietly cost you days.

A loan origination system is easiest to understand by following one loan through it. Every private-lending file passes through the same six stages, whatever software you use. The difference is how much work happens between them.

1. Inquiry

A broker, a referral or a web form brings in a lead. The useful thing to capture here is the source, because months later you will want to know which sources actually fund.

2. Application

The borrower or the officer fills in a short form and the loan file opens. Everything typed here should be reused later, never typed again.

3. Documents

The borrower uploads statements, IDs and entity documents. A good system lists what is still missing and checks what arrived against the file, so a mismatched name or date is caught before an underwriter opens it.

4. Underwriting

The underwriter reviews a complete file, not a partial one. Conditions are written against the loan, each with an owner and a due date.

5. Closing

Closing documents are filled from the loan record using your own templates, sent for signature and filed back to the loan.

6. Funding and hand-off

The loan moves to servicing with its terms, schedule and documents already in place. Nothing is rebuilt in a second system.

Where the days go

Most delays are not in any one stage. They are in the hand-offs: a document waiting in someone's inbox, a status nobody updated, a borrower asked for the same statement twice. One shared loan file is what removes those gaps.

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