Debt originations vs debt underwriting?
What is the difference in these job functions / their day to day? Do any firms combine these roles together into one?
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Yes
Some firms will even have groups where the UW quarterbacks the deal from origination through closing. You need to find a team/group that only handles originations IMO. These teams make the most money and hand off bullshit work to the UWs. Just my 2c
Okay but what would the differences really entail? That’s my confusion.
Originations is more focused on the front end of the deal (sourcing, sizing, and championing the deal internally). They're more "front office" in the sense that they deal more directly with clients and directly contribute to revenue generation. They also get to look at more deals than the back end underwriters. Once the deal is screened and sized by the origination team, it moves into backend underwriting where they're digging into the deal on a more granular basis. Backend underwriters are more focused on downside mitigation. Obviously different firms have different team structures and processes but typically there is more money to made on the front end since they usually get commission on each deal.
This is good. I'm an originator at a large bank (balance sheet) and responsibilities are pretty much this. However, our model is I stay with the loan for it's entire life cycle, from origination & closing all the way to the day it gets paid off (think of it sort of like acquisitions & AM in one). Our underwriters, howeverr, are separated by function (origination underwriters vs. loan management underwriters), but I'm always there. As mentioned by [CRE Debt Fund Analyst] Debt, many firms separate these functions (i.e. I would originate the loan and then hand it off to someone else). On one hand, there's good experience seeing how a loan performs, handling modifications and trouble scenarios, etc., but on the other hand I'd much rather just do 'new deals' and not deal with all the ticky-tack process stuff that comes with loan management.
I can speak a little more about this. Currently an UW analyst at an agency lender and work with the origination's team quite often. The structure is very similar to what is mentioned above, but there are nuances from firm to firm. In my team, the originations team source the deal (although some teams size it internally), then bring it over to me, where I size it, high-level due diligence, and turn over a preliminary S&U to the originators for them to share with the clients. From there, if they pursue it, it is my role to contact and engage third-party reports (appraisals, environmental, PCNA), do more due diligence, and compile a report to share with HUD. Typically, it is my role to guide/share info with the originators. If the deal goes through, the originators tend to make a good chunk from closing, and even more so if it is a new construction deal (If this is the case, then the UW team tends to talk more with the client as there are many more moving pieces and the originators stay a bit further back)
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