Lender Compliance

Lender Compliance

You can't understand lender compliance without understanding without learning a bit of how business lenders operate, let's cover a bit of that.

Business Lenders sell their loan paper. What this means is that almost all lenders bundle and sell their loan portfolios to investors in the secondary market. 

In order to get the most profit they can, they seek to show investors that the loans in those portfolios are “conforming” or all of a similar nature and that they are of a similar risk. In the risk category they want to show that their loans fall within a low risk of known default analytics. To do that they use Lender Compliance items.


You can use your Success System demo account to go through each lender compliance item one-by-one and have the Virtual Coach explain them to you. Examples are anything lenders can quickly scan to see if your client falls in a category of prior loan defaulting businesses, such as; operating a business from a residential address, not having a website, using a free email account, not NAP validating and about 20 more.



Why is lender compliance so important? Imagine you are a lender that is processing millions of loan applications each year where pulling business and personal credit reports on each might cost you $10 per applicant. What if you found a way to eliminate up to 80% of those applicants based on available free database scans that would then save you 10 million dollars a year and indicate which ones are higher risks of default? That is what Lender Compliance does for business lenders.


There are many free databases that let a lender‘s underwriting computer scan items such as bank ratings, NAP validation, address listings, phone types, UCC filings, Trademarks, NAISC classifications, web analysis scores, and business credit summaries. These databases allow lenders to build risk of default algorithms to instantly spot high versus low-risk applicants without having to spend money to do so.


In short, lender compliance items are simply the individual items the lenders' algorithms check to see if a business high or low risk of default. These vary lender to lender, and they are based on analysis of the past default data. Performing the free Success Scan on your prospects does the same thing a lender‘s underwriting algorithm is scanning for. It allows you, and your client, to know exactly what needs to be done so they will pass Lender Compliance.

In many cases the only way your clients will make it to the next level of a lender‘s underwriting approval process is by having all their lender compliance items turned to a “Green Check” versus a “Red X”. This gets your client to the point where their credit, revenue, time in business, and business industry become the consideration items for their approval, all of the hidden behind the scenes variable apart from those will be accounted for.



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