Risk Based Lending Policy

Description

This comprehensive Risk Based Lending Policy template is an essential tool for credit unions seeking to implement a robust and compliant lending strategy. The downloadable Word document provides a detailed framework for assessing and managing credit risk while offering competitive loan products to members.

The policy covers all aspects of risk-based lending, including loan pricing, underwriting criteria, and risk assessment methodologies. It outlines procedures for evaluating borrower creditworthiness, setting appropriate interest rates based on risk factors, and maintaining a balanced loan portfolio.

Key sections include:

1. Risk-based pricing tiers and criteria
2. Credit score and debt-to-income ratio guidelines
3. Collateral valuation and loan-to-value requirements
4. Income verification and employment history standards
5. Risk mitigation strategies and loan monitoring procedures
6. Regulatory compliance considerations
7. Roles and responsibilities of lending staff and management
8. Reporting and documentation requirements
9. Policy review and update processes

This template is customizable to fit your credit union’s specific needs and risk appetite. It incorporates industry best practices and regulatory guidelines to ensure your lending practices are both competitive and compliant. By implementing this policy, credit unions can effectively manage risk while expanding their loan offerings and member base.