Have you ever found yourself saying; “BUT OUR ESTIMATES ASSUME GUIDELINES ARE FOLLOWED!” When it comes to loans, lenders must know the likelihood of repayment, whether collateral exists and what it is worth relative to the value of the loan. That’s why there are guidelines! But what happens when there are deviations from the guidelines? …
Guidelines are the means of determining whether or not to make a loan. Guidelines avoid risk which is important to multiple parties. In Part I of his series, “When The Lender Deviates From The Guidelines,” Charles Cowan, Ph.D. introduced what could go wrong when guidelines are not followed. Part II dives into three key considerations, …
Guidelines are the means of determining whether to make a loan. When a borrower doesn’t meet the guidelines, this indicates that the lender doesn’t think the borrower is sufficiently creditworthy. In other words, the loan is too risky to make. So risky, in fact, that we don’t know how great the risk is we just know it’s …
