The Lending Corner
In partnership with my organization’s Chief Lending Officer, I developed a lending blog on our intranet, sharing information to help employees provide superior member service, and promote learning across the organization. This blog was the first of its kind. Sample posts are provided below. (Our CLO is a big fan of acronyms)
Overview of our lending philosophy.
The Credit Union has embraced a new philosophy to help us fund more loans and foster growth: The Lending Experience (TLE). TLE will enable us to invest further into its members, communities, and employees. TLE also offers consistency among lenders in different areas, providing direction to help navigate everyone through lending-related interactions with members.
Important Points
While there are many significant areas to TLE, we have listed some important components to remember when beginning and continuing lending conversations with members.
WABI – An approved loan application should answer “yes” to all of these questions, with good notes in the application as proof.
Willingness – Does the member have the willingness to repay the loan being considered?
Ability – Does the member have the ability to repay the loan being considered?
Best Interest – Is the loan in the best interest of the member?
Best Interest – Is the loan in the best interest of the Credit Union?
BUD to blOOm – The step by step process of a successful lending-related interaction
Build Member Relationships – Every member interaction should result in building deeper relationships with members from the beginning through the end, whether or not that includes loan information, applications, and/or closings.
Understand Needs – We know our products and services better than members. As such, the conversations with members involving loan products or services should include those that best meet their needs.
Decision – The Five Credit Keys: Factors that should be thoroughly evaluated when making a decision.
History/Trend
Budget
Demeanor
Collateral
Product/Pricing
Offer to Open – Once the application is approved, offer the most convenient opening/disbursing option to the member based on the conversation. Follow-up is crucial not only in providing superior service but also to the success of the Credit Union. Members might forget the conversations that they have or have further questions about the product. Superior service requires diligence at all stages of the loan process.
Finally, Quality Assurance is here to help all lenders at the Credit Union be successful. In addition to coworkers, management, and CU Info, we are another resource available for any questions you have and we look forward to hearing from you! Please feel free to reach out to us anytime.
Reminder about secured loans
Ensuring proper collateral on secured loans protects the Credit Union in the event the member defaults. It also helps members receive lower interest rates and save money. Here are some stats about some of our current secured loans:
44 secured loans are missing collateral records
51 loans have or had incorrect or missing VINs
70 records have duplicate VINs, meaning that at least 35 additional loans have incorrect VINs
This means that at least 130 secured loans currently on the books have invalid collateral
Should one of those members default on their loan, the Credit Union could take a loss of the full loan balance, being unable to repossess the collateral. Here are a few tips for double-checking your work to ensure that collateral information is processed correctly on secured loans:
Step #1: Check collateral before disbursing
A loan disbursal should always start at Projections to ensure proper funding date, rate, loan amount, and payment amount. Each workflow step thereafter should be reviewed as well, including the Collateral record. Be sure to click Modify to open the entire collateral record to ensure accuracy and completion.
The Collateral screen should be filled in with as much detail as possible, including the complete VIN. If the VIN or HULL number is less than 17 characters, use asterisks (*) at the end to fill in all 17 characters.
Step #2: Review the LARV’s Security Interest Disclosure box
The first page of the LARV provides a “Security Interest Disclosure” section to confirm the collateral and/or cosigner information. It is important to review this section to confirm that the collateral has been added properly. The LARV is a legal document that can be used in court in case of default. If the collateral screen in ELA was not completed, this section on the LARV will be blank and could legally prevent the Credit Union from being able to repossess.
Note: If you find that the LARV is missing collateral and you go back to the Collateral screen in ELA to complete it, remember to print and submit a new LARV with the correct Security Interest information.
Step #3: Check the Lien Tracking Record under the new loan
Tracking 30 contains Lien Information and clicking on the record will open it to view complete details.
Questions
For questions about collateral records and lien information for secured loans, contact Quality Assurance.
Go Be a Dream Maker!
Refresher on business loans.
Earlier this year, we updated our Business Lending practices so that all Business Vehicles are now financed through Business Lending. More information about the changes that were made can be reviewed in this CU Info Document.
What is a considered a Business Vehicle?
Sometimes it can be a challenge to distinguish whether a vehicle loan should be processed in Business Lending. To help clarify, here are some examples of vehicles that should be processed in Business Lending:
Titled Under Business: Any vehicle being titled in a business name and not a personal name, regardless of the type of vehicle being financed. (e.g., a doctor wants to purchase a sedan and title it in his business name for tax purposes)
Purpose AND Income both Business: Any vehicle being used primarily for business purposes, regardless of vehicle type or titling, AND the loan application uses said business income as a primary income source. (e.g., a member is purchasing a sedan to use primarily to drive for Uber AND the primary income source on the loan application is from Uber driving)
If a member is financing a vehicle and mentions that they drive for Uber on the side, but they have a different primary source of income and plan to use the vehicle mostly for personal reasons, the loan may be processed on the consumer side.
Additional considerations: If the member is mentioning any type of business income, side jobs, or that the truck they plan to finance has a special bed, such as a flatbed or utility bed, be sure to ask additional questions about the vehicle being financed and/or about the income being used to support the payments. This will help determine if the member should be referred to Business Lending. Examples of additional questions you might ask could include:
“So it looks like you’re interested in an [F-250, Silverado/GMC 2500, etc]. How will you be using the truck? What type of bed will it have?”
“You mentioned that you have another business in addition to your full-time job. What type of work do you do? Will you be using this loan for that purpose?”
Note: In addition to making sure all business vehicle loans are processed in Business Lending, it is important to note that business vehicles are not eligible for ReadyLoan Checks.
Go be a Dream Maker!