Diligence in underwriting can be the difference between a successful lending relationship and one that ends up in default. This is the fourth installment in a series of 6 regarding improving underwriting habits to protect the lenders collateral.
Bad Habit #4. Funding Without Lack of Knowledge of Other Ownership Interests and Exposures
By understanding what additional businesses, a borrower may have a financial interest in, allows you to further investigate and determine if you the lender has additional exposure.
It is critical that the lender use the IRS Wage and Income information to identify ownership, interests in other companies. It is best to obtain the Wage and Income information for both the borrower and the listed owner(s). It is most critical to obtain this information for whomever will be securing the loan.