Best Practices
Applications must be complete with full disclosure of personal information.
True
A vague reason for borrowing would be a red flag. What is an example of why a member would be vague?
What is, the previous loans were not used for the intended purpose, is there a habit of debt consolidation?
Is Child Tax Credit a source of income?
What is Yes. It is defined as non-employment income.
Capacity is determined by comparing a borrowers earnings with their debt obligations. What ratios are used to measure this?
What is, GDS, the Gross Debt Service ratio, and TDS the Total Debt Service ratio.
What does the acronym PCMLTFA mean?
What is Proceeds of Crime(Money Laundering) and Terrorist Financing Act.
What is a Credit Bureau and why do we require this for applications?
A clearing house for credit history information. Creditors provide the bureau with information about how their customers pay obligations.
What additional care is to be taken where a co-borrower or guarantor is unrelated to the borrower? It is referred to as ILA, what is the definition of this acronym?
What is Independent Legal Advice.
When assessing income for any member what is the most important question to ask yourself?
What is, Is this type of compensation normal for the industry?
Signs of recession or rising unemployment may be a signal for tightening of lending guidelines. This is also referred to as what C?
What is Conditions
There are two main types of mortgage fraud, they are.
What are Fraud for Profit and Fraud for Housing.
Verifying Identification for all parties to the loan is a necessary step, what red flag are we looking for?
What is, evidence of tampering or irregularities, possible fraud. Does the picture look like your client, does the age match, does the address match?
In assessing assets & liabilities, you need to develop good listening and questioning skills, name six open ended questions to begin with.
What is Why, Who, How, What, Where, when.
Jobs have changed, and so have methods of payments. Name three types of compensation people may receive for their work.
What is, hourly, contract, commission, seasonal work, bonus, car allowance.
Strong net worth is usually the result of good money/credit management and savings habits. This is referred to as C------ and the members and credit unions security blanket.
What is Capital
What is SOLIDIFI
What is the new appraisal system at CCCU.
The Notice of Assessment(NOA) is an acceptable form of income verification on it's own.
What is False, it is not acceptable as the only form of income verification.
The purpose of a loan must be clearly stated. This is relevant for risk and pricing and compliance with AML. What is the acronym AML?
What is Anti Money Laundering.
Why is it good business practice to require three years of income verification for Sole Proprietors?
What is, to confirm the history and sustainability of the income, is it declining or growing.
Open ended questions help us to get the full story, not just what your member is telling you. What C does this refer to?
What C is called Communication.
What is CUMIS?
What is, Member Insurance Protection for personal loans, LOC's and mortgages
Loan notes must formulate and present recommendations in a clear and concise manner. How you put a loan together reflects on you as a lender, This is referred to as autographing your work with---?
What is Quality
Be wary of the number of applicants involved in a loan application, we need to ensure they are not stacking several low incomes simply to achieve qualification. What is important to identify?
What is, the capacity for potential career growth?
What is, the conditions of employment, seasonal?
What is, will the remaining borrowers make the payments if one income is gone?
Why are inconsistencies in relation to borrowers age versus profession, years of work, level of income, accumulated assets and credit history important.
What is, this could identify Fraud or misrepresentation of information, resulting in a loss to the credit union.
Autograph your work with Quality or as in the world of the Eight C's we call this.
What is Control
What is the program where a member may borrow additional funds at the time of purchase?
What is Purchase Plus Improvements.