During CRE loan underwriting , the lender verifies property cash flow, orders third-party reports ( appraisal , Phase I , engineering), performs sponsor diligence (background check, REO schedule, financial statements), drafts the credit memo , and submits the loan to credit committee . The process typically takes 4 to 6 weeks on perm and 2 to 4 weeks on bridge.
What does the lender verify on cash flow?
Trailing-twelve operating statement against bank deposits and tax returns. Rent roll against signed leases. Operating expenses against vendor invoices. Real estate taxes against the most recent assessor data. Insurance against the actual policy. Lenders apply standard underwriting adjustments, vacancy floor, management fee floor, replacement reserves.
What sponsor diligence is performed?
Personal financial statements, real estate schedule, prior CRE loan history (any defaults, modifications, special servicing), background check, OFAC screening, and entity-level KYC. Some lenders also reference recent lenders and operating partners. The sponsor profile factors into pricing and structure.
What is credit committee?
The lender's internal approval body. The deal team presents the credit memo, structural recommendations, and any identified risks. Committee can approve as proposed, approve with conditions (e.g. additional reserves, lower proceeds), or decline. Most institutional lenders run committee weekly or bi-weekly; timing should be confirmed before signing the term sheet.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Multifamily Market Commentary · Fannie Mae Economic & Strategic Research · 2026-Q1