{"id":7084,"date":"2024-02-01T11:38:00","date_gmt":"2024-02-01T09:38:00","guid":{"rendered":"https:\/\/moneyhub.ee\/?p=7084"},"modified":"2025-05-19T16:06:07","modified_gmt":"2025-05-19T14:06:07","slug":"loan-originator","status":"publish","type":"post","link":"https:\/\/moneyhub.ee\/en\/useful\/articles\/loan-originator\/","title":{"rendered":"What is a loan originator?"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"7084\" class=\"elementor elementor-7084\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-604f65ab e-flex e-con-boxed e-con e-parent\" data-id=\"604f65ab\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-84576d7 elementor-widget elementor-widget-shortcode\" data-id=\"84576d7\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-shortcode\"><nav aria-label=\"breadcrumbs\" class=\"rank-math-breadcrumb\"><p><\/p><\/nav><\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-51262ba e-flex e-con-boxed e-con e-parent\" data-id=\"51262ba\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t<div class=\"elementor-element elementor-element-51174b97 ddddf e-flex e-con-boxed e-con e-child\" data-id=\"51174b97\" data-element_type=\"container\" data-e-type=\"container\" data-settings=\"{&quot;background_background&quot;:&quot;classic&quot;}\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-4f9495c3 elementor-widget elementor-widget-heading\" data-id=\"4f9495c3\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">What is a loan originator?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-776f4723 e-flex e-con-boxed e-con e-parent\" data-id=\"776f4723\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-32ef940 elementor-widget elementor-widget-image\" data-id=\"32ef940\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"2240\" height=\"1260\" src=\"https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7.png\" class=\"attachment-full size-full wp-image-7086\" alt=\"loan originators\" srcset=\"https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7.png 2240w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-300x169.png 300w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-1024x576.png 1024w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-768x432.png 768w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-1536x864.png 1536w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-2048x1152.png 2048w\" sizes=\"(max-width: 2240px) 100vw, 2240px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-3f145f31 e-flex e-con-boxed e-con e-parent\" data-id=\"3f145f31\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-305bb570 elementor-widget elementor-widget-heading\" data-id=\"305bb570\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Within P2P investing, investors would have noticed the term loan originator on the peer-to-peer investing platform. But what roles do loan originators play? <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-2d17beff elementor-widget elementor-widget-text-editor\" data-id=\"2d17beff\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><b>Post summary:<\/b><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><b>What is a loan originator?<\/b><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Primary functions of loan originators<\/b><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Scoring loan originator risk<\/b><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Why use loan originators in P2P investing?<\/b><\/li><\/ul><p><span style=\"font-weight: 400;\">Within P2P investing, investors would have noticed the term loan originator on the peer-to-peer investing platform.<\/span><\/p><p><span style=\"font-weight: 400;\">Loan originators are part of <a href=\"https:\/\/moneyhub.ee\/money\/loans\/\">p2p investing<\/a> alongside borrowers, lenders and the peer-to-peer platform itself.\u00a0<\/span><\/p><h2><span style=\"font-weight: 400;\">What is a loan originator?<\/span><\/h2><p><span style=\"font-weight: 400;\">A <a href=\"https:\/\/moneyhub.ee\/money\/short-term-loans\/\">loan originator<\/a> is an institution or individual that works with an underwriter to complete a loan transaction for a borrower. Since they facilitate loans, loan originators are part of the primary loan market, including crowdfunding and the P2P lending market.<\/span><\/p><p><span style=\"font-weight: 400;\">Adding loan originators is entirely new in the peer to peer investing market. It allows P2P platforms to quickly facilitate loans compared to traditional p2p investing, where it is only the platform that searched for loans and then added them to their websites.<\/span><\/p><p><span style=\"font-weight: 400;\">Typically, if you were to use p2p investing as an alternative investment strategy, you would scour a platform&#8217;s website to search for loans and determine whether the platform had conducted its due diligence.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">However, with loans provided through loan originators, investors can view loans sold through the platform that have already met their own due diligence criteria.<\/span><\/p><h2><span style=\"font-weight: 400;\">The primary role of a loan originator<\/span><\/h2><p><span style=\"font-weight: 400;\">The primary role of a loan originator in peer-to-peer investing is to sell debt.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">It essentially means that the central skill of a loan originator is selling loans to borrowers.<\/span><\/p><p><span style=\"font-weight: 400;\">A loan originator usually manages the loan application process, including getting the borrower to sign loan agreements, using processors, underwriters, and bookkeepers\u2013all of whom share the same objective.<\/span><\/p><p><span style=\"font-weight: 400;\">A loan originator then aims to convince borrowers that their service is the best alternative in the market and to take borrowers through the loan application process until the last stage.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">To many in the p2p investing market, the loan originator is sometimes seen as a sales vehicle first and then a loan approval platform second.<\/span><\/p><p><span style=\"font-weight: 400;\">However, although not inaccurate, the description is not entirely fair.<\/span><\/p><p><span style=\"font-weight: 400;\">Loan originators are not only interested in getting as many loans pushed through as possible.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">On the contrary, platforms have specific criteria that loan originators must adhere to, meaning that obtaining a loan through a loan originator can be even stricter for those searching to borrow money.<\/span><\/p><p><span style=\"font-weight: 400;\">For instance, loan originators will ask questions to determine borrowers&#8217; needs and circumstances.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">They will research and demand to know about the borrower for due diligence and ensure the borrower receives the right loan and the best interest rates.<\/span><\/p><h2><span style=\"font-weight: 400;\">Scoring loan originator risk<\/span><\/h2><p><span style=\"font-weight: 400;\">Most P2P investing platforms list their loan originators according to their risks. The scale generally represents the lowest and highest counterparty risk in that order.<\/span><\/p><p><span style=\"font-weight: 400;\">Each company has their own criteria for assessing loan originators, but most are as follows:<\/span><\/p><p><span style=\"font-weight: 400;\">The <\/span><b>low-risk loan originator<\/b><span style=\"font-weight: 400;\"> is a financially strong company with\u00a0<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">a stable market<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">reliable asset quality<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">operating in a well-established and sound regulatory environment<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">has robust debt-collection techniques\u00a0<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">lead by a management team with a notable track record of success<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">A <\/span><b>medium-risk loan originator<\/b><span style=\"font-weight: 400;\"> is somewhat financially weaker yet remains a stable company. With an average market position, the company has a relatively positive net operating income and debt vs equity number.<\/span><\/p><p><span style=\"font-weight: 400;\">A <\/span><b>high-risk loan originator<\/b><span style=\"font-weight: 400;\"> is considered financially weak. The company has a low market position, has no stable net operating income and has negative debt versus equity numbers. Furthermore, it will likely be:<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">a new company<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This company&#8217;s performing portfolio will be less than the medium rate of repaid loans<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The portfolio will contain many overdue loans based on their historical data.\u00a0<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The company&#8217;s internal loan issuing and scoring model is either inefficient or unknown.\u00a0<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">Some P2P platforms have a list of <\/span><b>default loan originators<\/b><span style=\"font-weight: 400;\"> for those who have not passed their due diligence and risk assessment. Or the company might be in financial distress and can not fulfil its obligations.<\/span><\/p><h2><span style=\"font-weight: 400;\">Why use loan originators in P2P investing?<\/span><\/h2><p><span style=\"font-weight: 400;\">Though this may sound worrying for investors in the peer-to-peer marketplace, these preventive measures ensure that the loan originator does not facilitate too much bad debt.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">In return, investors obtain a more stable portfolio to invest their funds in. Although the <a href=\"https:\/\/moneyhub.ee\/news\/price-updates\/\">interest return rate<\/a> is lower, so is the risk to their capital.<\/span><\/p><p><span style=\"font-weight: 400;\">It is why several companies only offer loans through loan originators &#8211; to ensure there is a lower risk to the investors&#8217; capital, even if this means sacrificing offering higher returns.<\/span><\/p><p><span style=\"font-weight: 400;\">Per the risk criteria above, most risk specialists only permit loan originators who meet our requirements.<\/span><\/p><p><span style=\"font-weight: 400;\">This practice is usually called &#8216;skin in the game.&#8217;<\/span><\/p><p><span style=\"font-weight: 400;\">For instance, if a Loan Originator with 10% Skin in the game issues a \u20ac5,000 loan to a borrower and then puts it on a platform\u2019s marketplace, only \u20ac4,500 of this loan will be open for investors.<\/span><\/p><p><span style=\"font-weight: 400;\">The loan originator will keep \u20ac500 on their balance sheet. Skin in the game ensures that the interests of the loan originator and investor are aligned.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Both sides have a stake in the loan not to default.<\/span><\/p><p><span style=\"font-weight: 400;\">Another precautionary measure usually taken by P2P investing platforms uses a buyback guarantee. This contract compels a loan originator to buy back all the loans if his borrowers miss or default on payment.<\/span><\/p><p><span style=\"font-weight: 400;\">A Buyback Guarantee applies when a loan is delayed for more than 60 days. The Loan Originator will repurchase the investment for the principal nominal value and accrued interest.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Using a loan originator in P2P investing is advantageous for investors if they invest large sums of money.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Within P2P investing, investors would have noticed the term loan originator on the peer-to-peer investing platform. But what roles do loan originators play? <\/p>\n","protected":false},"author":3,"featured_media":7086,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-7084","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"acf":[],"blog_post_layout_featured_media_urls":{"thumbnail":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-150x150.png",150,150,true],"full":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7.png",2240,1260,false]},"categories_names":{"21":{"name":"Articles","link":"https:\/\/moneyhub.ee\/en\/category\/useful\/articles\/"}},"tags_names":[],"comments_number":"0","rttpg_featured_image_url":{"full":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7.png",2240,1260,false],"landscape":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7.png",2240,1260,false],"portraits":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7.png",2240,1260,false],"thumbnail":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-150x150.png",150,150,true],"medium":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-300x169.png",300,169,true],"large":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-1024x576.png",800,450,true],"1536x1536":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-1536x864.png",1536,864,true],"2048x2048":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-7-2048x1152.png",2048,1152,true]},"rttpg_author":{"display_name":"David Bailey","author_link":"https:\/\/moneyhub.ee\/en\/author\/davidbailey\/"},"rttpg_comment":0,"rttpg_category":"<a href=\"https:\/\/moneyhub.ee\/en\/category\/useful\/articles\/\" rel=\"category tag\">Articles<\/a>","rttpg_excerpt":"Within P2P investing, investors would have noticed the term loan originator on the peer-to-peer investing platform. But what roles do loan originators play?","_links":{"self":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/posts\/7084","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/comments?post=7084"}],"version-history":[{"count":0,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/posts\/7084\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/media\/7086"}],"wp:attachment":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/media?parent=7084"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/categories?post=7084"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/tags?post=7084"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}