Hi! It’s Tory Haggerty from Tuscan Club University’s Fair Lending School and welcome to another Fair Lending Short.
In this Fair Lending Short I want to talk about your annual Fair Lending training specific to your lending staff.
One of the reasons why I created my Fair Lending School is because I looked around the industry and most Fair Lending Training was the definition of discrimination, the prohibited basis and a couple of examples of some other organizations that screwed up. That’s not really helpful when it comes to lenders doing their job.
What I recommend is that when you’re training your lenders, at a minimum what you’ll want to cover is those areas we talked about, but train them on policies and procedures. Setting up strong policies and procedures is the best way to start building a fair lending program. And by that I mean, clear and concise underwriting standards. You need this credit score, this loan to value, this debt to income ratio. Setting that policy is the best way to start building a program.
Training people to follow those policies is the next step, because having a beautiful policy, if you think such things are beautiful, and I do, is only effective if people actually know about it and are following it. So when it comes to your annual fair lending training, cover some of the basics.
Cover the application process, cover your loans products and steering risks. Cover the basis of underwriting. Cover the denial process, like adverse action notices and how to handle them. Cover the pricing and rate sheet process and cover the exception process. Remember, exceptions should be just that, they shouldn’t happen often and you should have an approval process for those exceptions and every lender should know what that process is.
If you do nothing else, on your annual fair lending training, at least cover what your policies and procedures are at your organization. Some lenders have been there a long time and think they know how to do their jobs, but I do Fair Lending interviews all the time with lenders that have been around twenty years and when I ask them questions on policies and procedures, you’d be surprised at how often they don’t know the basics. Don’t take it for granted that they know. Train them on the basics and do it on an annual basis.
Thanks for reading!