Credit approvers tend to believe the numbers set before them, so they often do not scrutinize the data. The same forces—limited time to review and a desire to increase the loan portfolio—influencing lenders also influence credit approvers, so credit approvers rarely re-compute the data. Usually, any issues that arise are relatively minor, and the loan turns out to be a satisfactory investment. However, sometimes the oversights lead to a poor credit decision.
This "Spilled Milk" article, originally published in The RMA Journal, presents a tale of costly underwriting and credit approval mistakes. Learn about:
The financial statement missteps.
The first signs of trouble.
What the analysis revealed.
Credit risk is a critical area in today's banking environment. Download this article for insight on how to minimize losses in your credit portfolio.