What is the term used for the process where a lender initiates a new loan for a borrower?

Loan origination refers to the process where a lender creates a new loan for a borrower. It encompasses all steps involved from the initial application through to the closing of the loan, including assessing the borrower's creditworthiness and determining the terms of the loan. This process is crucial as it establishes the groundwork for the lending relationship and ensures that the lender meets regulatory requirements while addressing the specific needs of the borrower.

In contrast, loan underwriting is the subsequent phase where the lender assesses the risk of the loan based on the borrower's financial history and other factors, while loan servicing involves managing the loan after it has been issued, including payment processing and customer support. Loan processing is a segment of the origination phase that deals specifically with gathering necessary documentation and verifying the information needed to approve the loan.