What is the primary purpose of a loan origination?

The primary purpose of loan origination is to assess borrower eligibility. This process involves evaluating the applicant's financial situation, including their credit history, income, employment status, and other relevant factors to determine whether they meet the lender's criteria for a loan. The origination process is critical for ensuring that the lender provides loans to borrowers who are likely to fulfill their payment obligations.

A thorough assessment of borrower eligibility helps minimize the risk of default and supports responsible lending practices. While the other functions mentioned, such as approving the loan, collecting fees, and managing servicing, are integral parts of the lending process, they come after the initial stage of determining a borrower's suitability for a loan. Therefore, the focus of loan origination primarily lies in the comprehensive evaluation of the borrower’s qualifications.