All Credit Products: Mortgages, Consumer Loans, Home Equity Lines/Loans, Auto Loans, Credit Cards
Preiss&Associates’ fair lending risk assessment has three parts:
- developing a risk profile,
- determining how well your bank controls for those risks and
- determining how to deal with the risks and controls.
Determining a bank’s risk profile can be divided into the risks associated with pre-application activities, the risk associated with application activities and servicing activities. To control for the risks identified in the risk profile requires reviewing bank policies and procedures and monitoring to ensure the policies and procedures associated with the controls are being followed. The difference between the risks identified in item 1 and the controls highlighted in item 2 are the fair lending risks (risk gaps) the bank faces which need to be addressed. Finally, the risk gaps are reported to senior management and the Board of Directors with plans as to how to close the gaps.
- Establishing the risk profile of the bank
- Identifying the controls the bank uses to identify fair lending risks.
- Recognizing the risk gaps and the plan to resolve the gaps.
- In addition to highlighting the bank’s risk profile, monitoring the fair lending risk controls and closing the risk gaps the bank often learns additional details about how to conduct its business.
- The bank identifies policies and procedures that need to be changed.
- The bank finds opportunities to reduce costs, run their operations more effectively and increase profitability.