Retail Lending Examination Procedures

Transaction Testing

Examiners will conduct transaction testing to verify compliance with the bank’s policies and procedures; assess risk selection; determine accuracy of MIS; verify compliance with the applicable policies, laws, and regulations; or determine the accuracy of loan accounting and servicing.

  1. Please provide electronic files for each major retail product that will allow an examiner to select a sample to conduct the testing. The file should be provided in a file compatible with the National Credit Tool (NCT) or an Excel worksheet that includes relevant loan information (e.g., account number, customer name, booking date, loan amount, payment information (current payment due, last payment date), loan term, interest rate, delinquency status, risk score, loan-to-value, and repayment capacity measure).

NOTES: If NCT is available, examiners are encouraged to use NCT sampling capabilities to assist in the transaction testing. Also, examiners may want to inform the bank of the types of transactional testing that may be performed. Examples are included below.

Areas To Be Tested
Loans approved in the last 60 days (since DATE). If credit scoring is used, provide two files, one for accounts not automatically approved and one for accounts automatically approved.
Loans approved in the last 60 days (since DATE) that would have been denied except for an override or exception to policy.
Loans that were 60 days or more past due as of (DATE), but current as of (DATE).
Loans extended, deferred, or rewritten in (MONTH).
Loans charged off in (MONTH).
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