Differences between the Commercial Mortgage Originationprocess and the Residential Origination process

by Chris Santo, LendingAppswww.lendingapps.com. csanto@lendingapps.com

Commercial Origination Residential OriginationBroker's Role

• Collect Property Information:o 2 yrs property operating

statementso Current rent rollo Brief property description

• Complete commercial loan appusing commercial mortgagesoftware that:

o Normalizes the property'sinc / exp and adjusts forinflation

o Applies the appropriateunderwritten reserves

o Calculates the stabilizedNCF

o Estimates value andcalculates the LTV andDSCR

o Supports your derivation ofNCF in the ExecutiveSummary

• Submit to lenders in aprofessional and credible package

• Receive final term sheet and getsignature

• Close and fund loanLender's Role

• Review NCF, LTV and DSCR• Prepare / Send quote to broker• Order services:

o Appraisalo Environmental (if req.)o Engineering (if req.)o Escrow / Titleo UCCo Principal credit

• Close and fund loan

Broker's Role• Collect Borrower information:

o 2 yrs tax returnso Paystubso 3 mos. bank statements

• Complete 1003 using residentialprocessing software

• Calculate Debt-to-income Ratios(front / back)

• Pull credit, review FICO• Determine the lender and loan

program, stacking order• Submit for prelim. / Clear

conditions• Float / lock loan• Order services:

o Appraisalo Escrow / Titleo Flood cert.

• Submit for final underwriting• Order docs• Close and fund loan

Lender's Role• Review 1003, credit• Validation / Clear conditions• Final underwriting / Draw docs• Signed doc review• Close and fund loan

The main difference you will find is that on the commercial side, the broker has to spend much more timeunderstanding the rental income and the operating expenses in order to put together a loan request for acommercial mortgage lender.