Difference between originations and credit?
Been looking into this but having trouble finding a concrete difference. Any help is greatly appreciated
Trending Content
| +48 | Being asked to stay behind and train my replacement | 14 | 3d | |
| +45 | New Comp Database - Google Form (Now with Data Validation) | 24 | 19h | |
| +35 | Leave brokerage to be GP | 7 | 5h | |
| +30 | What does REPE actually do? | 12 | 1d | |
| +24 | Seeking Career Guidance in Real Estate Development Post-Graduation | 3 | 22h | |
| +24 | Public Homebuilders | 9 | 1d | |
| +22 | REPE/Development GPA | 15 | 2d | |
| +17 | MSRE/MSRED with no RE experience; Naive to think I’ll land a job afterwards? | 4 | 3d | |
| +16 | Fisher Brothers | 5 | 4h | |
| +16 | UC Berkeley MRED vs Columbia MSRED? | 2 | 5d |
Career Resources
This could mean a lot of things because people use the terms loosely and people sometimes use them interchangeably (especially when talking about Debt vs. Equity). I'm no expert, but when I think of originations I think of the person going out there and bidding on the loan. Basically your debt acq. guy. When I think credit I think of the credit officer at the bank that tells the originations person what he's able to offer (e.g., you can go up to 65% on this one, L + 300, etc.) and sometimes has veto power over a loan if they think it's too risky/doesn't provide the bank/fund enough protection.
Hope this helps.
Lot's of context needed to actually make any calls, so here are my very loose two cents...
Originations - Fancy way of saying "sales" of a loan product (i.e. originating the mortgage) - this is typically the person/dept who works for a lender (or conduit) who has to get borrowers to take loans so they can be sold or portolio-ed. (i.e., this is the "debt side" equivalent of "acquisitions")
Credit - Wide open term, could be the whole "debt" or "lending" side of the business - for a person, I think it is often used as shorthand for "credit underwriting" or "credit portfolio mngt". But again, it's way to wide to really give much idea without context (by comparison, organizations is far more of term with a universal meaning)
So you're probably seeing this in terms of roles at lenders. Generally, many of the banks are split between originations (sales) and Credit (underwriting and structuring) (sometimes the banks will have three teams - underwriting and structuring will be different teams).
Originations: This is relationship management. This team is out there pounding the pavement, looking for deals to lend on. Generally, when a deal is brought in, this team will do a cursory underwriting to make sure the deal makes sense. They will also write up the term sheet and negotiate the points of the deal.
Credit: The credit team is brought in when the deal either goes to 'hard quote' or is won via a 'soft quote'. A 'hard quote' basically is the banks way of saying, "We have fully underwritten this deal and we have gone to committee. Committee has blessed this deal and we are fully prepared to lend on this deal at these terms, assuming DD checks out." The credit team takes the cursory underwriting and makes sure it is realistic. This is the banks way of effectively making sure the originator isn't puffing up the underwriting to get a deal done. The credit team will fully underwrite the deal and dive deep. Additionally, the credit team will opine if the bank is willing to give on certain points, such as increasing the LTV/LTC, decreasing the structure of the loan, etc. Effectively, the credit team acts to make sure the deal is good, and actually digs in deeply. One may argue they are fully incentivized to make sure the deal is good and strong, which counters the originations team want to generate business. They counter balance each other.
Structuring: Sometimes this team is intertwined with credit, other times it is its own team. This team opines on the structure of the loan and if the bank is able to/willing to do certain things. Such as: how should future funding terms be structured, what about reserves and requirements, what about language in the loan docs on business points, how do we want to structure covenant testing.
When you see originations vs underwriting, this is generally what it means.
Error eum incidunt omnis rerum sunt molestiae et corrupti. Autem ipsum recusandae iure dolorem qui. Aut aut quia adipisci totam unde quos.
Suscipit ut eius saepe impedit architecto voluptatem perferendis. Dolores porro molestiae ullam ut delectus explicabo ad.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...