What is the primary function of a Loan Origination System?

The primary function of a Loan Origination System (LOS) is to accept a loan application and manage the transaction. An LOS streamlines and automates the entire loan origination process, which encompasses the collection of applicant information, documentation, and processing of applications. This system serves as the backbone of the lending workflow, allowing financial institutions to efficiently handle various stages of the loan process, from initial application through approval and disbursement of funds.

While evaluating borrower credit scores, verifying employment history, and identifying potential risks associated with the borrower are essential components of the broader lending process, they are often handled as part of the functions supported by the LOS rather than being its primary focus. The LOS integrates these evaluations into its workflow, but its main role is to facilitate the overall management of loan applications and transactions. This comprehensive focus on management and processing is what differentiates it as the crucial tool in the loan origination phase.