Why the Initial Inquiry Matters

As the procuring broker, you are the vital link that connects borrowers, real estate agents, and referral sources in the initial loan inquiry.  Your role is not just to collect material facts and set expectations, but to ensure the smooth progression of the entire process.

This first step determines whether the loan is viable and whether you earn your fee.

Key Objectives of the Initial Inquiry: The Foundation of a Successful Transaction

During your first conversation with the prospective Borrower, gather essential details:

• Property Type
• Requested Loan Amount
• Lien Position (first or second)
• Estimated Value & Protective Equity
• Loan Purpose & Use of Net Proceeds
• Source of Funds for Monthly Payments
• Exit Strategy

Protective Equity is critical—this is the portion of property value above the loan amount.  Example: A $1,000,000 property with a $650,000 loan has 35% protective equity.  This factor strongly influences lender approval.

Opinion of Value

• Use online tools (Redfin, Zillow, Realtor) and comparable sales to estimate value.
• Confirm that all preliminary valuations are subject to a third-party appraisal, paid by the Borrower.
• For commercial properties, inform borrowers early about Phase 1 Environmental Site Assessment requirements.

Tip: If borrowers expect “no out-of-pocket costs,” clarify appraisal and assessment fees upfront to avoid wasted effort.

Does the Loan Improve Borrower’s Position?

Ask:

• Will the new loan reduce debt and improve cash flow?
• Does it provide an interim solution to stabilize finances?

Calculate projected cash flow improvements with Borrower and agent assistance.  This step is vital for lender confidence.

Documentation & Digital Organization

• Create a lead file in Outlook or your CRM using property address + agent name.
• Request all exhibits digitally for streamlined processing.
• Email yourself property references (Zillow, Redfin, Realtor) for quick access.
• Obtain a property profile from your title company, including purchase History and recorded documents.

Borrower & Entity Verification

• For individuals: Check Google and LinkedIn.
• For entities: Verify via the Secretary of State and Google search.
• Place all findings in the lead file.

Jurisdiction & Foreclosure Rules

• If the property is out of state, confirm judicial vs. non-judicial foreclosure laws.  Many lenders prefer non-judicial states.
• Exceptions exist (e.g., Florida, Texas) for entity borrowers.

Minimum Documentation

• Completed loan application
• Most recent payment statement
• Three months of bank statements (personal and business, if applicable)

Second Trust Deed Considerations

• Confirm if junior liens are allowed.
• For 1–4 unit residential properties, second liens are generally permitted by Law.
• For commercial or multi-unit properties, review the deed of trust and the loan agreement for restrictions.

Environmental & Compliance Checks

• For commercial properties, run a GeoTracker search for contamination risks:
  https://geotracker.waterboards.ca.gov/map/
• Download and store the summary in your digital loan file.

Key Takeaways

• Set expectations early (appraisal, environmental costs).
• Organize digitally for efficiency.
• Verify Borrower and property details thoroughly.
• Understand lien restrictions and foreclosure laws.
• Calculate cash flow improvements to strengthen the loan submission.

✅ Initial Loan Inquiry Checklist for Procuring Brokers

1.  Gather Key Loan Details

• Property type
• Requested loan amount
• Lien position (first or second)
• Estimated value & protective equity
• Loan purpose & use of proceeds
• Source of funds for monthly payments
• Exit strategy

2.  Verify Protective Equity

• Calculate the loan-to-value ratio (e.g., 65% loan / 35% equity).
• Confirm sufficient equity for lender requirements.

3.  Opinion of Value

• Use online tools (Redfin, Zillow, Realtor) + comps.
• Inform Borrower: Appraisal required & paid upfront.
• For commercial: Phase 1 Environmental Assessment required.

4.  Borrower Expectations

• Clarify out-of-pocket costs early (appraisal, Phase 1).
• Confirm Borrower understands these requirements.

5.  Financial Impact

• Will a loan improve the Borrower’s cash flow?
• Calculate projected savings & include in submission.

6.  Documentation

• Completed application
• Most recent payment statement
• 3 months bank statements (personal & business if applicable)

7.  Digital Organization

• Create a lead file in Outlook/CRM (address + agent name).
• Store all exhibits digitally.
• Email property references (Zillow, Redfin) to yourself.
• Obtain the property profile from the title company.

8.  Borrower & Entity Verification

• Individuals: Google + LinkedIn
• Entities: Secretary of State + Google
• Place findings in the lead file.

9.  Lien Restrictions

• For 1–4 units: Second liens allowed by Law.
• For commercial/multi-unit: Review deed of trust & loan agreement for restrictions.

10.  Environmental & Compliance

• For commercial: Run GeoTracker search → download summary.
  https://geotracker.waterboards.ca.gov/map/

✅ Tip: Always confirm foreclosure laws for out-of-state properties (judicial vs. non-judicial).

Closing

The initial loan inquiry is more than a conversation—it’s the foundation of a successful transaction and your ability to earn fees.  By following this checklist, you ensure accuracy, manage Borrower expectations, and present a well-documented, compelling loan package to lenders.  Diligence at this stage saves time, builds trust, and positions you as a professional who delivers results.