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Monday, August 18, 2008

Daily Observations- New Role of the Underwriter

As I like to share with you each evening, interesting facts that happened to us during the day, today I found out that underwriters are having a new role. Traditionally, the underwriter is involved after the business development officer has done a thorough analysis to determine the feasibility of the project.

However, because of today's economic environment, the underwriter for the financial institution is getting involved in the initial discussion with a client as well as with the business development officer. The business development officer rather than making a final determination to issue a letter of intent or not are being instructed to run all deals by the underwriter.

I can understand this new way of thinking for very large transactions, but I was appalled today to have this process applied to a $375,000 loan for a strip center. The business development officer reflected to me that he was unable to issue any preliminary letters of intent without the underwriter "blessing" the proposed financing.

What this indicates is that the role of the business development officer, in certain financial institutions is either going to be significantly diminished in capacity, or at the worst be removed from the process. If I look at some of our current business development officer that we work with, there have been definite transitions in their individual status, as well as their employment.

Could this be the future of the business development officer?

For more information on the perceived role of the business development officer, or financial broker, please visit

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