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Questions and Answers
What document contains the highlights of the proposal?
What is the purpose of the Appraisal Report?
When advising the client of the approval of their application, what information must be included?
What is the role of the account officer in the signing of legal documents?
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What is the purpose of the Basic Business Information document?
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When must all necessary legal documents be secured?
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What is the purpose of the Loan/Line Agreement?
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What is the purpose of the Mortgage Trust Indenture?
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What is the purpose of the Promissory Note?
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What should be maintained and updated?
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What is the purpose of the Release or Availment?
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What is the purpose of the Account Monitoring and Credit Administration?
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What is the purpose of the Credit File?
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What is one of the Major Areas of Account Monitoring?
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Study Notes
Loan Packaging and Approval
- A credit proposal consists of: Credit Proposal Executive Summary, Credit Proposal, Basic Business Information, Credit Investigation Report, and Appraisal Report
- The credit proposal executive summary contains highlights of the proposal
- The appraisal report includes the results of the appraisal conducted on the collaterals and types and valuation of collaterals
Approval and Notification
- The client should be informed of the approval of their application
- The advice shall clearly state: type of facility, amount approved, basic terms and conditions, and other pre-release conditions
Credit Documentation, Availments, and Disburslements
- All necessary legal documents should be secured prior to the initial release/restructuring or availment
- Account officers should serve as witnesses to the signing of all legal documents and verify the signatures of borrowers
Credit Documentation
- Principal Credit/Lending Documents include: Loan/Line Agreement, Receivables Financing/Discounting Line/Agreement, and Restructuring Agreement
- Availment Documents include: Promissory Note and Disclosure Statement
- Collateral/Security Documents include: Mortgage Trust Indenture, Assignment of Receivables, Chattel Mortgage, Joint and Several Signatures (JSS)/Comprehensive Surety Agreement, and Real Estate Mortgage (REM)
Manner of Availment
- Release or availment should be in accordance with the approved terms and conditions and subject to completion of all necessary and appropriate legal documents
- Releases may be made in the following manner: one-time/lump sum release or partial release
Receipt and Maintenance of Credit Documents
- All original documents related to each availment should be reviewed and maintained
Release of Collaterals and Preparation of Documents
- Cancellation of mortgages and release of collateral are allowed upon full payment of the loan, including other attendant obligations
Account Monitoring and Credit Administration
- Proper provision of credit support, control systems, and other practices necessary to manage outstanding risk assets
- Major areas of account monitoring include:
- Compliance to Terms and Conditions
- Collection of Loan Amortization
- Prompt Payment of Accounts
- Collection of Past Due Obligations
- Compliance with Key Covenants
- Periodic Submission of Requirements
- Monitoring of Industry Situation
- Appraisal/Inspection of Collateral
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Description
This quiz covers the components of a credit proposal, including the executive summary and appraisal report, as well as the notification process for loan approval. Test your knowledge of loan packaging and approval!
