What does TPO mean in UNCLASSIFIED

Third Party Origination (TPO) is a lending arrangement where a financial institution, known as the originator, partners with a third-party entity to originate and service loans. The third-party entity, called a TPO provider, typically has expertise in specific lending segments or geographic regions and assists in identifying and evaluating potential borrowers.

TPO providers can offer several benefits to financial institutions, including:

• Access to a wider pool of potential borrowers: TPO providers often have established relationships with borrowers and can identify qualified individuals or businesses who may not be accessible through the institution's traditional channels.
• Specialized expertise: TPO providers often specialize in specific lending segments, such as consumer lending, commercial lending, or mortgages. This expertise allows them to assess risk and underwrite loans effectively.
• Streamlined loan processing: TPO providers handle much of the loan origination process, including underwriting, documentation, and closing. This streamlines the process and reduces the workload for the financial institution.

In a TPO arrangement, the roles and responsibilities of the parties involved include:

• Originator: The financial institution that provides the funding for the loan. They set lending policies and guidelines, approve loans, and manage the ongoing relationship with the borrower.
• TPO provider: The third-party entity that originates and services the loan. They identify potential borrowers, assess their creditworthiness, prepare loan documentation, and handle loan servicing.
• Borrower: The individual or business that receives the loan. They are responsible for repaying the loan according to the terms of the agreement.