Loan Production Office (LPO)

A loan production office (LPO) is a branch of a bank or credit union that is specifically designed to originate loans. LPO's are typically located in high-traffic areas, such as shopping malls or near major highways, in order to make it convenient for potential borrowers to apply for loans.

LPO's are staffed with loan officers who are trained to assess the creditworthiness of potential borrowers and to help them find the right loan products for their needs. LPO's also offer a variety of other financial services, such as checking and savings accounts, credit cards, and investment products.

The primary function of an LPO is to generate new loans for the bank or credit union. LPO's are typically compensated on a commission basis, so they have a strong incentive to originate as many loans as possible. This can sometimes lead to LPO's making loans to borrowers who may not be creditworthy.

In order to mitigate the risk of lending to borrowers who may not be able to repay their loans, LPO's typically have strict underwriting standards. These standards may include requirements for a minimum credit score, a down payment, and proof of income. LPO's may also require borrowers to purchase private mortgage insurance (PMI) in order to protect the lender in the event of a default.

Despite the risks involved, LPO's can be a valuable asset for banks and credit unions. LPO's can help banks and credit unions grow their loan portfolios and generate new revenue. LPO's can also help banks and credit unions reach new customers who may not be able to access traditional banking services.

If you are considering applying for a loan, it is important to shop around and compare rates from different lenders. You may also want to consider working with an LPO that can help you find the right loan product for your needs.