John was in
the office early. After months and months of scratching to keep his company going, things finally looked hopeful. A small group of loan officers with a decent pipeline joined his company at the end of last week. And the two people he had making outbound calls on live leads were going to close seven loans between them this month. And John had two appointments to take applications set up for tomorrow.
John looked out his window. The day had gone so well, he barely realized the sun was low and the office was now empty. Time to clean off his desk before hitting the road—he had a school play on the schedule for tonight and he was harboring images of his daughter kicking him in his shins and his wife smacking him on the head if he was late.
He opened the last letter and began to read. Somehow, all the good stuff was losing its luster. The state wanted to send someone from the Department of Financial Institutions to examine his company. After
a couple of minutes he realized his shins and head were starting to hurt and decided this letter was a morning task.
So, what do you do when you find yourself in John’s shoes? Preparing is half the battle. Usually, examination notices come with an information request. They would like to see a list of closed loans, applications that you denied, or applications that were withdrawn or canceled by the applicant during the examination period. Depending upon the state, they may require this information in an electronic format that contains certain fields. Additionally, you may have a questionnaire to complete. The length and depth of the questionnaire depends entirely on the state.
I’ve found most examiners gracious in granting extensions of time to respond to the initial request, but don’t count on it. The published regulations and the department’s own rules can form the bottom line for your performance. Start gathering the requested information well before the deadline. When completing the questionnaire, take your time. Remember that you’re only responding to one state and only provide the information requested. If the questions allow it, limit your responses to production in that state. This isn’t sneaky or back-handed—it’s prudent. You have an asset to protect for the benefit of your family and your employees. Provide what you must, but no more.
Once you have a report of your production for the examination period, look through it and see if it contains any memorable files. You might include your operations group—processor, underwriter, doc drawer, funder and shipper—in this process. If you identify any memorable files, crack them open and review what made them that way. If you have any miscellaneous documents that will help explain what you remember, get them into the file.
When an examiner opens up a loan file, that loan’s whole story consists of the documents there. Even if the file contains a problem that might show up in your report of examination, you want your file to speak clearly enough to the examiner so that he or she finds no reason to start following rabbit trails and asking questions that you know will go nowhere. The examiners need to understand what happened in a file within the four corners of the paper you provide. Other documents or narrative notes that make the file clear do no good unless they are in the actual file. A short and concise response makes the examiner’s job easier, and that will make your examination a better process for both of you.
