The questions presented here are a solid foundation for your loan assessment process.  They are designed to gather critical information about the loan request and the Borrower's circumstances.  These questions are part of the lender’s loan processing and underwriting process.

 ·            Loan amount, for what term?

·            First or second lien?

·          Type of property: single-family, owner- or non-owner-occupied, commercial, apartments, industrial, occupancy, or other.

·          Where is the property located?

·          Property address:

·          The loan purpose is of utmost importance, especially if the loan request is for a single-family owner-occupied property.  Understanding the use of loan proceeds, whether primarily for business purposes (51% or more of the loan proceeds) or for consumer purposes, is a critical factor in determining the viability of the loan.

·            Property value.  How did the borrowers determine the value?   A Borrower’s estimate of value is often incorrect or intentionally exaggerated.

·            How much cash out requested?

·            Current total liens.

·          Are the liens current?  If not, how much is the arrearage, and the reason?  Get the complete story in writing.  Completeness may make or break your transaction.  Some reasons may be rational, while others are just an attempt to conceal.

·           Loan-to-value:  LTV ratio, total loans divided by appraised property value (APV)

·           A detailed description of the collateral property is not just important; it’s essential.  This requirement ensures a thorough and diligent approach to the loan assessment process.

·          The Borrower's exit strategy is crucial.  What are their plans to repay this loan?  This question underscores the Borrower’s responsibility and the lender’s need for a cautious approach.

·          Rental income stream?  What gross rents, vacancies, and expenses are required to determine net operating income, often called NOI?  The NOI calculation excludes debt service.  Will the NOI cover the loan payments and property expenses?

·            Most recent payment statement(s)-please obtain.

·            When was the property purchased, and for how much?

·          Have they made any significant improvements or upgrades?  Please provide a list of upgrades and costs.

·          Pictures of the outside and inside: In most cases, pictures are found online, with Zillow, Redfin, Realtor.com, and Trulia.  Photos of the inside and outside are necessary if the property has undergone significant upgrades that enhance its value.

·         Is the property owner/Borrower a private individual or an entity?  If an entity, what is the purpose of the enterprise?  Bottom of Form

·         If the property is newly or partially reconstructed, inside and outside pictures are necessary, as well as a list of improvements, costs, and what improvements remain to be completed.

·        Any exceptional circumstances?  Weaknesses in the transaction include a History of late payments, significant arrearages in payments, accrued unpaid property taxes, outstanding judgments and liens, state and federal taxes due,  probate sales, bad credit, open bankruptcy, pending divorce proceedings, tax liens or judgments, the property has a recorded notice of substandard condition, red tagged for code violations, successor trustee acting on behalf of a family trust, multiple borrowers, multiple cross-collateralized properties, etc.

·        Forward the prospective Borrower a loan application and authorization to obtain credit.  Request the most recent property loan payment statement and at least three months of bank statements.  Use a commercial loan application rather than a 1003 residential form when possible.

·          Ask for the handwritten purpose of the loan letter.

·        Does the Borrower have an online presence?  If they are a company, they may have a website.  If they are individuals, they may have a LinkedIn profile.  This information, when added to the executive summary sent to the lender, provides a comprehensive view of the prospective Borrower and enhances the credibility of the assessment process.

 These questions will allow the agent to draft an executive summary for the prospective lender.  The agent’s role is to compile the information gathered from the Borrower and present it clearly and concisely.  Once the lender has submitted a letter of interest, the Borrower has signed it, and agreed to the terms and conditions, the appraisal can be ordered.

 At that time, the loan processing and underwriting begin.  These processes involve a thorough review of the Borrower's financial situation, the property’s value, and the loan’s terms and conditions.  The goal is to ensure that the loan is a good fit for both the Borrower and the lender, with a hopeful conclusion, resulting in a closed loan and a fee.