question about bank loan committee

[Jill F.]

We are working on a deal for a commercial loan for a 20 unit property. This is the first time we have tried to buy something this big. Our loan officer and underwriter said they will be taking our deal to the loan committee next week and we should have an answer by the end of next week. I am (as always) biting my fingernails hoping the loan is approved and then it came to me... there are loan officers and underwriters on bigger pockets that might be able to shed some light on this mysterious (to me) process. When a loan officer goes to committee, how often does the committee shoot down the loan application? Does the loan officer take any semi-reasonable deal presented by a customer or do they screen heavily and only take those deals they think are good ones? Are they "graded" on how many deals they can get approved? Should I be encouraged that it is going to a committee or does this always happen? 

[Ken Jernigan]

Hello--taking your questions in turn--

How often shot down--This depends on your loan officer and how well he's prepped the underwriter and committee. Good lenders know what they can get approved. @Ryan Kurth is right--too many committee declines ruins your credibility.

Does the loan officer take any semi-reasonable deal---Yes, some do. 

Are they graded--Typically, loan officer comp plans are base plus commission, structured so that you can make an OK living with the base but the commission really buys the house, car, kid's education, vacation. Commissions are only paid on closed deals, not approved ones. There is also the quarterly nut--meaning if you don't make a minimum level of closed loans, you're shown the door.

Should I be encouraged--Yes. but so much depends on your loan officer.

A note of caution--It's not over until the loan closes and funds. After 40 years as a lender and borrower, I've seen approved deals tank on sudden changes in terms, pricing, failed appraisals, environmental issues, undisclosed bankruptcies, criminal records and a host of other unforseens. Good to have a few lenders working on your deal.