Retail Lending Examination Procedures

Control Systems (Risk Management, Loan Review, Quality Assurance, Audit)

1. Relevant reports issued by internal and external audit, quality assurance, compliance management, and loan review since the last examination. Include management’s responses.

2. Policies and procedures for major functional areas, including underwriting, account management, collections, loan loss reserves, and quality assurance.

3. A chronology log of significant policy changes and other events relevant to the portfolio’s performance.

4. Risk management reports and analyses used to monitor performance of the portfolio and individual products.

5. Loan volume reports by number and dollar amount for the entire portfolio and individual product.

6. Summary of monthly delinquency and net loss reports from the most recent year-end and for the year-to-date for the portfolio and individual products. Also provide any vintage analysis, dynamic delinquency, and loss analysis completed to monitor the portfolio. Include other credit performance analyses you feel are pertinent.

7. An overview of the scorecards used, if any, and summary of any changes planned.

8. Most recent model validation for each scorecard used.

9. Risk score distributions and migration trends.

10. Most recent loss forecasts.

11. If dealers, brokers, or other third-party originators are used, MIS used to monitor quality of applicants and credit performance of loans sourced from each third party used.

12. Description of controls (e.g., financial and audit requirements) and performance reports used to monitor the quality of service of third parties, as well as due diligence criteria used to select third parties for the retail activities.