CREDIT UNDERWRITING Clause Samples

CREDIT UNDERWRITING. (1) Within sixty (60) days of the date of this Agreement, the Board shall ensure proper collateral documentation is maintained on all loans and correct each collateral exception listed in the most recent Report of Examination, in any subsequent Report of Examination, in any internal or external loan review, or in any listings of loans lacking such information provided to management in writing by the OCC. (2) Effective immediately, the Bank may grant, extend, renew, alter or restructure any loan or other extension of credit only after: (a) identifying the expected source of repayment in writing; (b) structuring the repayment terms to coincide with the expected source of repayment; (c) obtaining and analyzing current and satisfactory credit information, including cash flow analysis, where loans are to be repaid from operations; (d) documenting, with adequate supporting material, the value of collateral and properly perfecting the Bank's lien on the collateral where applicable; and (e) if a commercial loan, (i) underwriting is based on financial analysis of the borrower and the primary source of repayment with exceptions reported based on borrower financial analysis and the primary source of repayment, and (2) global cash flow performed to include guarantor and related entities. Failure to obtain the information in subparagraph (c) of this paragraph shall require a majority of the full Board, or a delegated committee thereof, to certify in writing the specific reasons why obtaining and analyzing the information in subparagraph (c) of this paragraph would be detrimental to the best interests of the Bank. A copy of the Board certification shall be maintained in the credit file of the affected borrower(s). (3) Within sixty (60) days of the date of this Agreement, the Board shall develop an appropriate written exception reporting process (“Exception Reporting Process”). At minimum, the Exception Reporting Process must include: (a) aggregated underwriting policy exceptions by key areas (debt-to-income, credit scores, and loan-to-value, as well as other criteria as appropriate) as identified in the Board approved Loan Policy for each loan type; (b) limits for exceptions by key exception type as well as overall exceptions based on dollar volume as a percent of capital for each portfolio; (c) exception reporting must include the actual debt-to-income, credit score, and loan-to-value, as well as any other criteria, of each loan rather than just stating that it is outs...