What is a COMPLETE Loan Package?

Question

After 25 years as a private, hard money lender, I've come to realize that many mortgage brokers don't know the documents required by lenders to evaluate, approve and close a loan. So here is a list I found and modified. As a hard money lender I probably would not require many (most) of these docs, but it would depend on the individual loan. For instance, strong collateral and low LTV - like 40% - would require almost no backup documentation, while a marginal loan at high (65% - 70%) LTV may require most of these documents.

1. Borrower / Sponsor Documents

Entity & organizational

• Borrowing entity docs (LLC/LP/Corp formation docs)
• Operating Agreement / Partnership Agreement
• Certificate of Good Standing
• Organizational chart (showing ownership structure)

Financial strength

• Personal Financial Statement (PFS) of guarantors
• Schedule of Real Estate Owned (SREO)
• Last 2–3 years personal tax returns (for guarantors)
• Last 2–3 years business tax returns (if applicable)

Track record

• Sponsor resume / bio
• Experience summary (similar deals completed)
• References (sometimes)

2. Property Information

Basic property details

• Property overview (address, type, year built, units/sq ft)
• Photos
• Rent roll (current, detailed)
• Trailing 12-month operating statement (T-12)
• Current year operating statement (YTD)

Historical financials

• Last 2–3 years operating statements
• CapEx history

Market data

• Submarket overview
• Comparable rents/sales (if available)

3. Deal / Loan Request Summary

• Loan request amount
• Loan purpose (acquisition, refinance, construction, bridge)
• Purchase price or current value
• Sources & uses of funds
• Business plan (value-add, lease-up, etc.)
• Exit strategy (refinance, sale, hold)

Often presented as:

• Executive summary or deal memo

4. Third-Party Reports (Ordered during underwriting)

• Appraisal
• Phase I Environmental Site Assessment (ESA)
• Property Condition Report (PCR) / Engineering report
• Survey (ALTA survey)
• Title report / title commitment
• Zoning report (sometimes)

5. Income & Lease Documentation

• Copies of major leases (or all leases for smaller assets)
• Lease abstracts (sometimes)
• Estoppel certificates (later in process)
• Tenant sales reports (for retail, if applicable)

6. Banking & Liquidity Verification

• Recent bank statements (2–6 months)
• Proof of equity injection funds
• Brokerage / investment account statements

7. Legal & Compliance Documents

• Purchase & Sale Agreement (PSA) (for acquisitions)
• Borrower resolutions / authorizations
• KYC/AML information (Know Your Customer)
• Insurance certificates (or quotes)
• Entity certificates (incumbency, authority)

8. Underwriting & Financial Models

Sometimes borrower-provided, sometimes lender-built.

• Pro forma financials
• Cash flow model
• Debt service coverage ratio (DSCR) analysis
• Rent comps / expense assumptions

9. Construction / CapEx (if applicable)

• Construction budget
• Scope of work
• Contractor agreements
• Plans & specs
• Timeline / draw schedule

Joseph Zimmerman · Answer

From the borrower side, the items on this list split into two groups. Anything that comes out of my books is fast, because I run a P&L on each property every month, so a trailing 12 and a year-to-date operating statement are already in the format a lender wants. My schedule of real estate owned stays current for the same reason.

Entity documents and insurance certificates are always the hardest to dig up since they aren't something I review monthly, but now I keep those in the same folder as the monthly statements.

Entity documents and insurance certificates are always the hardest to dig up since they aren't something I review monthly, but now I keep those in the same folder as the monthly statements.

Chris Seveney · Answer

We recently had someone fail AML/KYC. I was shocked but it is something you want to check because it does happen.

Ken M. · Answer

When I used to do mortgages for people, It was extra work trying to pry that information from people. Since I worked with business people, it was understandable that they were often unorganized and others simply didn't want their information out there. But it was the golden rule, "He who has the Gold, makes the rules". That's the list the underwriter needs to qualify the loan.

Using creative finance is very different, it's the honor system and most Subto buyer's just don't know what keeps them out of trouble. It's nice being in a position where understanding how to get that information across to prospective investors keeps them out of trouble.

Erik Estrada · Answer

This is a great list and totally agree with you about there being an overall lack of information from borrowers coming from brokered deals.. I think the main issue is not setting the expectation upfront with the client. If you are constantly playing the game of chasing rate to the bottom and not requesting the required information to solidify terms, it will be a constant pain to try to confirm in a sort of concrete terms.

I usually try to collect at minimum a loan application and soft credit check. If they are investing the minimum time to complete an application, then it is a borrower that is respectful of your time.

Kate Porter · Answer

@Don Konipol Your answer to Richard about signature authority and control is the clearest explanation of what those documents is super helpful.

One question on it. Do you pull the filed articles from the Secretary of State yourself, or work from the copy the borrower sends over?

I ask because the failure closing attorneys seem to describe most often in private lending is not a missing document. It is the articles and the operating agreement contradicting each other on whether the entity is manager-managed or member-managed, and both of those usually arrive from the borrower.

I build software in private lending, so this is professional curiosity rather than a pitch.

Your point that a 40% LTV loan needs almost no documentation is something most people selling into this market never say out loud.

Richard Bautista · Answer

Thank you very much for this list - very helpful !

new/aspiring/newbie lender here.. I have a few questions..

how would you analyze the documents listed under 'entity and organizational' . What information do these documents hold that helps your decision whether to proceed with the borrower or not?

please explain Schedule of Real Estate Owned

Don Konipol · Answer

Organizational documents are needed so that the entity holding title can be identified, managers/owners/members of the entity can be identified to see who has signature authority for the entity, who controls the entity, who the lender wants to guarantee the loan if the borrower is indeed an entity.  Further, title needs these documents to be able to insure title and to determine if lawsuits, bankruptcies, etc. are outstanding.Schedule of REO is simply a listing of all real properties owned by the subject entity or individual, usually with approximate market values and mortgage balances owed.

What is a COMPLETE Loan Package?

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