What Does Referred Mean On A Loan Application

 When a loan application is "referred," it means that the application has not been immediately approved or declined by an automated system or initial review process. Instead, it requires further assessment or manual review by a human underwriter or loan officer.

Here are a few reasons why a loan application may be referred:

  1. Incomplete Information: If the application is missing required information or documentation, it may be referred for further review to ensure all necessary details are provided.

  2. Marginal Credit Profile: If the applicant's credit profile is not clearly in line with the lender's criteria for approval or denial, the application may be referred for manual review to assess the applicant's creditworthiness more thoroughly.

  3. Borderline Income or Debt-to-Income Ratio: If the applicant's income or debt-to-income ratio is on the borderline of the lender's criteria, the application may be referred for manual review to determine if the applicant qualifies for the loan.

  4. Unusual Circumstances: If there are unusual circumstances or complexities in the applicant's financial situation or credit history, the application may be referred for manual review to evaluate these factors more closely.

  5. Policy or Compliance Requirements: In some cases, a loan application may be referred due to internal policy requirements or regulatory compliance considerations that require additional scrutiny.

When a loan application is referred, it typically undergoes further review by a human underwriter or loan officer who assesses the applicant's financial situation, creditworthiness, and overall risk profile. The underwriter may request additional documentation or clarification from the applicant before making a final decision on the application.

It's important to note that a referred loan application does not necessarily mean that the application will be denied. It simply means that the application requires additional review before a decision can be made. Applicants may need to wait longer for a final decision on their loan application compared to applications that are immediately approved or declined

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