Making Bank Happy

[Roger Doe]

What do banks look for? Are there any loan officers/underwriters here that can chime in?

Here is what I know. I believe that loan officers make about 1% on loan amount. So, they are always looking for solid investors who will make a lot of future loans. If they do $5 MM in loans every year, they can make an additional $50k to supplement their salary which is huge for them.

But, at the end of the day, the underwriter makes the final decision on loan approval. So, what are these guys looking for? I am probably way off about this but it seems that they look for particular characteristics. It seems that commercial loans (which include apt buildings) comprise about 3-5% of each branch's portfolio of loans. So, they don't want to do too much. Then, they want different types of commercial loans so it's diversified - some residential, some office, etc. Also, they are looking for loans that are as conservative as possible - properties with very stable cash flows (solid tenants with long-term leases).

So, how much weight really goes into looking at LTV, debt income ratio, etc.? Or are these parameters simply the initial things they look at and in order to approve the loan? Because it seems that they really emphasize the credit worthiness of a multiple-tenant base.

I guess I have a lot of questions. The reason for these questions is when I make my loan packages, I just want to know exactly what I should be emphasizing and de-emphasizing.