loan commitment

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Loan commitment

Assurance by a lender to make money available to a borrower on specific terms in return for a fee.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Loan Commitment

The amount in loans that a bank will make or may be required to make in the near future, but has not yet made. Loan commitments may be open-ended or closed-ended. Suppose a bank approves two loans in a year; one is a revolving line of credit for $50,000 and the other is a business loan for $100,000. One would say that this bank has an open-ended loan commitment of $50,000 (because the principal amount in the loan, when repaid, may be borrowed again) and a closed-ended loan commitment of $100,000 (because once its principal is repaid, it no longer must be committed to that borrower). Banks must disclose their loan commitments.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

loan commitment

In real estate,a formal promise by a lender to loan up to a specified amount of money, depending on the appraised value of the collateral, with additional details regarding the interest rate, term of the loan, property on which mortgage will be taken, and a date on which the commitment will expire.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
The paper saidtightening of domestic prudential policies, particularly those tightening measures meant to preserve resilience of the banking system are effective in curbing growth of real bank loan commitments to borrowers for acquiring new residential properties.
But that might be misleading because the increase in deposits might be happening at banks with no decline in loan commitments. At the outset of the crisis, the level of unused commitments was significantly higher than the deposit base supporting these promises.
This kind of practice may contribute to development of irresponsible behavior of economic entities in terms of compliance with loan commitments and weakening of positions of commercial banks in adequate evaluation of loan risks," the National Bank said.
The Canadian portfolio being acquired includes some $650 million in loan commitments, of which $500 million is outstanding.
The Shared National Credits (SNCs) Review for 2010 covers large loans and formal loan commitments that are shared by three or more supervised institutions.
PLN President Fahmi Mochtar said with the additional loan pledges; PLN has secured loan commitments valued at US$ 4.9 billion and Rp 19.6 trillion for 33 projects
The Financial Services Authority (FSA) is poised to force lenders to look much more closely at the ability of people to make repayments, such as checking spending habits and existing loan commitments. A ban on self-certification mortgages - under which borrowers do not have to prove their income - is also likely under the FSA's planned reforms for the market in the wake of the credit crunch.
At the same time, BMI announced its new pre-approval process, committing to provide an answer on mortgage loan commitments and conditions within a maximum of 24 hours to customers who provide their CPR and evidence of income.
It also includes a variable funding note providing an additional financing source for unfunded loan commitments. The floating rate asset-backed notes are being offered through a Rule 144A/Reg S private offering with offered notes totaling $1.2 billion, or 91.7% of the collateral pool.
Loan Commitments: Issues Related to Pricing, Trading, and Accounting, GAO-05-131, Feb.
Issues have been raised whether commercial banks systematically underprice loan commitments and whether generally accepted accounting principles provide meaningful disclosure of the economics of these commitments.