Scenario to closing in four steps

Sending a deal to a lender can feel like dropping it into a black hole. Here is how the desk handles a scenario, in four steps.

1. Submit the scenario

Send the address, the numbers and your track record. The scenario form has four parts: program, property, economics and sponsor. A live leverage panel shows your LTV, LTC and ARV-LTV as you fill it in. Submitting is a preliminary inquiry only. It is not a credit or loan application, a commitment to lend, a loan approval or a rate lock.

2. Preliminary review

The desk reviews the scenario against the program parameters and tells you the indicative terms or what information is still needed. Scenarios are reviewed in the order they arrive. A no is worth having early, so if the deal does not fit you hear it before you spend money.

3. Indicative terms and underwriting

If it fits, the file moves into underwriting. Appraisal, title and entity documents are requested. The full list for each program is published up front so nothing arrives as a surprise late in the file. Figures quoted before underwriting are indicative, not committed.

4. Close and draw

Loans are interest only with a balloon at maturity. On renovation loans, draws are released against completed work.

How to speed it up

• Pick the program first, then read its tear sheet.
• Have the entity documents and the guarantor's information ready.
• Send a line-item scope of work for any renovation.

RED is the direct lender and lender of record, so you are working with the desk that makes the decision.

Program figures are indicative only and subject to complete documentation, underwriting, appraisal and final credit approval. This post is general information, not financial or legal advice.