A consultant told me that, for purposes of the Larger Creditor Safe Harbor (>250 million), the “loan production function” means an employee, officer, director, department, division, or other unit of the creditor with responsibility for generating Covered Transactions, approving Covered Transactions, or both. The term does not include a person whose only responsibility is for credit administration or risk management, such as loan underwriting, loan closing, preparing loan documentation, disbursing funds, collections, servicing, monitoring loan performance, or foreclosure processing. However, if a person who performs any of these functions (e.g., loan underwriting) also performs loan production functions (e.g., offers loans), he/she will be treated as part of the loan production function.
Our underwriters approve loans & review appraisals. He also pointed me to a 2006 SRC Insights where Fed stated that examiners would seek to verify proper segration between the appraisal process (including review of appraisals) and underwriting. He stated that even though the 2006 guidance is no longer in effect - the spirit of the current independence guidance reflects that of the 2006 version.
Do we lack proper independence?
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Opinions are my own and not of my employer.