Loan officers and the chief lending officer can play a role in protecting asset quality during the sales and application process, particularly during times of rapid loan growth. Here are three ways that the lending department can proactively help manage credit quality.
1. Request a consistent set of product-specific documents.
Consistent documentation at the start of the application ensures comparability throughout the loan-approval process, which helps maintain asset quality. It also reduces bottlenecks that can kill loan approvals and waste resources. For example, a Schedule K-1 (Partner’s Share of Income, deductions, credits, etc.) is critical to calculating cash flow, so if cash flow will be used in underwriting, the form should be requested up front.
2. Request documents in digital form.
Getting rid of paper reduces costs and decreases manual errors in the application process, improving data quality. Obtaining digital copies before a loan is booked means all necessary information is available for the credit file on the back-end system for future loan reviews. Lenders often report that they only collect paper documents, but many of those same lenders have never requested electronic versions. In some cases, prospective borrowers will put lenders in touch with their accountant to obtain the digital documents, which can reduce the back-and-forth communication that may happen when applicants aren’t familiar with the tax schedules or other documents needed.