The process of applying for a new loan by an individual and the lender takes the step of processing such a request may described as the loan origination process. The lender in this case may be a bank or any other financial institution. The application of the loan and honoring of the loan application made by an individual is what in most of the cases forms the process of loan origination. The steps in the origination process may also involve the act of dishonoring the loan application. The loan origination process may be determined by the need for taking a loan. For example, the loan origination process for a mortgage may be different from that of business.
The loan origination process may be accomplished using a number of channels. The agents, brokers, self-service and the online applications forms the most common channels utilized to complete the loan origination process. The loan origination systems has a wide application by most of the financial institutions today. Supporting the process of applying for the loans is the reason behind the development of the loan origination systems. The various tasks which may be carried out by the loan origination system may include the process of identifying the borrowers of funds, the processing of the information related to such applications and vetting the borrowers so as to establish their credit worthiness. The system will also carry out the documentation for the origination process and then approve or disapprove the loan application. When the origination system honors the loan application by the borrower, the disbursement of the funds to the borrower will then follow. On the flip side, the system may also disapprove the loan application by the borrower and in this case, the funds disbursement will not be made.
Organization which chooses to use the origination systems are likely to enjoy a number of benefits. Most of the loan origination systems offers the financial institutions with solutions which are more responsive to the needs of the dynamic business needs. The system gives a financial institution a chance to render it services with minimal costs. To the side of the bank, the costs are in most of the cases cut. Since the origination process is automated, the process of decision making is faster. Process of monitoring the approved loans is also made faster. There reason behind this is that there are solutions for monitoring the loans on real time basis. The loan origination system will also bring the benefit of transparency, service improvement to the customers and increased flexibility.