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#314682 - 02/10/05 02:53 PM Does anyone audit the Loan Review function...?

And if you do, do you have an audit program that you are willing to share that details the steps you take? Thanks.

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#314683 - 02/10/05 03:24 PM Re: Does anyone audit the Loan Review function...?
Starter Offline
Platinum Poster
Joined: Aug 2004
Posts: 513
I keep a tracking report of the loan review report comments and follow up to ensure the Bank has corrected items noted in the report - no specific audit program.

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#314684 - 02/10/05 08:09 PM Re: Does anyone audit the Loan Review function...?
Creditcop Offline
Diamond Poster
Joined: Sep 2002
Posts: 1,685
You could hire an outside consulting company who performs loan reviews to see if their findings match loan review's. Of course, that will cost $$ to do that. The safety and soundness examiners will evaluate the bank's loan review function for their exam and they will give they opinion as to the status of the loan review program.

Our bank's external auditors do a limited review of loans and loan review as part of their audit.

If the examiners differ very much in the loan grades that loan review has assigned, that is an indication of problems with the bank's loan review program. Remember that examiners only use loan grades of Pass, Special Mention, Substandard, Doubtful, and Loss and for retail consumer loans, there is no doubtful grade. So the problem with the examiners come in where the examiners classify loans and the bank's loan review department doesn't have them classified. That can lead to an underfunded loan loss reserve and the possiblity of having to make a additional loan loss reserve allocation based on the examiners finding. That is not a fun time at the exit interview or the meeting with the bank's board of director's.

If you are concerned about your bank's loan review function and don't want to wait for an exam to find out it makes the grade, then hire an outside company to do a loan review and compare results.

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#314685 - 02/10/05 08:10 PM Re: Does anyone audit the Loan Review function...?
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
We have not yet but will be including loan review in the audit program. The idea is to audit them against their plan, have they met portfolia coverage goals, do they follow their processes that they state, are their cited issues tracked, etc.
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy

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