I am curious to know how often you complete a Loan Review. We review a 20% sample each month of all loans. I find more exceptions are due to the fact that the lein entry, mortgage, has not had time to be processed and returned. Does anyone know if there is a schedule available somewhere? I would like to hear what others are doing. Thanks!

That seems to be adequate or maybe a little high for an original quality review as long as you are not finding a lot of issues and the ones that you find are effectively addressed.

On-going reviews for credit quality should be conducted at least annually and normally involve the review of all classified loans and large loans up to a penetration level of 30%-50% of the portfolio.

I used to do a 20% review of all loans made the previous month. Examiners told me that was overkill, although it probably kept the loan officers on their toes more. I have now gone to an annual review of a sampling of loans. Like you, I was finding the same things on the loans each month that were not complete. This way I actually see what they are not doing rather than just getting nasty notes from them back each month! Any loan of $100,000 or more has a formal loan review performed.

"Like you, I was finding the same things on the loans each month that were not complete. "

Then you might as well not even do a review if management isn't going to fix the problems that are identified.

As of now, I review all Real Estate loans made each month. This has been a problem area for us in the past. Other types are reviewed quarterly generally 10%.

I review at least 10% of real estate loans and 5% of all other loans. The consumer loans are done within a couple of weeks of the month end of when they closed. When I finish with them I start the real estate loans so those are usually closed for at least 3 weeks. At that point everything should be in the file.

AllSmiles - I'm assuming you are talking about reviewing for underwriting, etc.? Not compliance? I agree with rlcarey if the same problems keep surfacing what is management doing to correct the issue.

If this pertained to compliance reviews, I would say the same thing, repeat problems, what is management doing to correct the issue. And, if compliance I would say that once a month is a bit much unless you have the luxury of time. Otherwise, my loan audit schedule is based on risk.

Allsmiles, are you the loan review department as well as the auditing department? Or just auditing the loan review function? If you are the loan review department and are acting as the only function of loan review, you should refer to the Interagency Policy Statement on the ALLL from December 2006.

http://www.federalreserve.gov/boarddocs/srletters/2006/SR0617a1.pdf
Review pages 16-21. This gives great guidance on the scope, frequency and depth of your loan reviews. Overall, the purpose of loan review (as you should already have staff checking for documentation) is credit quality and assessing the adequacy of the ALLL as a loan review officer. We look at documentation, but focus mostly on the quality of the credit, proper collateral, ability to repay, and risk ratings.