submit a loan package to a lender or lenders Purpose of loan submission package

Submit a loan package to a lender or lenders purpose

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submit a loan package to a lender (or lenders)Purpose of loan submission package (executive summary)?Provide lenders with information needed to quickly evaluate request Package typically contains information on:type, size, and location of propertymaps and photographsproperty agepurchase pricerequested loan amount and other basic loan termsrecent operating history of propertycurrent rent roll, and estimated PGI over next twelve months 12
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Permanent Loan Application and Approval ProcessBased on loan submission package and, perhaps, conversations with borrower or borrower’s broker, lender either (1) rejects loan or (2) issues a preliminary quoteQuote (term sheet)contains basic terms of proposed loanis sometimes referred to as a letter of intent (LOI)Borrower then choses to reject or accept quoteOr, in some cases, attempt to negotiate better loan terms 13
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Permanent Loan Application and Approval ProcessIf lender & borrower are able to agree on the basic loan termslender will finalize loan applicationwhich is then signed by borrower 14
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Permanent Loan Application and Approval ProcessLength &details of loan application vary withsize of loan requesttype of property being used as collateral (e.g., office, apartment)whether loan will be held in lender’s portfolio or sold in secondary market to be used as collateral for the issuance of a CMBS However, loan applications typically contains a great deal of terms & language that will be included in final promissory note/mortgage15
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Permanent Loan Application and Approval ProcessWhen application is signed, borrower typically pays a non-refundable loan processing fee to cover lender expensesFee is usually modest, often < $5,000 even on loans in excess of $15 to $20 millionLender will also require a “good faith” deposit, which can be 1-2% of loan amountRequired because lender will now proceed to secure the loan funds, complete loan underwriting process, and issue a loan commitment 16
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From Loan Application to ClosingWith signed application, loan processing fee, good faith deposit, and deposit for legal fees & third party reports in hand, the lender is confident borrower intends to close loanSo…makes sense for lender to incur the additional expenses associated with moving loan forward to formal commitment and closing 17
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From Loan Application to ClosingLender’s required “due diligence” begins once application is signedDue diligence process typically includes:ordering appraisal, title report, and 3rdparty inspection, compliance, and engineering reports This is also when lender evaluates property’s income producing ability in detailLender performs due diligence to make sure borrower did not misrepresent property in any way in original loan submission package 18
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From Loan Application to ClosingIf lender uncovers
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  • Fall '11
  • MALONE
  • Debt, Mortgage loan, loan application, Construction & Development

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