Meaning
Loan administration refers to the management and oversight of loan activities by a financial institution, such as a bank or credit union.
It involves the development and implementation of policies and procedures that govern the lending process, from loan origination to loan servicing and collection.
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The structure of loan administration can vary depending on the size and complexity of the institution but generally includes a hierarchy of positions responsible for different aspects of loan management.
Elements of Loan Administration
The key components of loan administration include:
1. Loan Policy: A written loan policy that outlines the institution’s lending guidelines, criteria, and risk management procedures.
2. Administrative Structure: A clear organizational structure that defines roles and responsibilities for loan officers, underwriters, loan processors, and other staff involved in loan administration.
3. Loan Supervision: Continuous supervision and review of loan cases to identify potential problem loans and ensure compliance with lending policies and regulations.
4. Credit Files: Maintenance of detailed credit files for each borrower, including transaction records, financial statements, and other relevant information.
5. Problem Loan Identification: Development of strategies and techniques for identifying problem loans, such as monitoring payment delinquencies and changes in the borrower’s financial status.
6. Problem Loan Monitoring: Technical skills to supervise and monitor problem loans, such as establishing payment plans and negotiating loan modifications.
7. Recovery Strategies: Unique steps to recover loans from specific borrowers, such as using debt collection agencies or legal action.
8. Loan Recovery: Effective ways to recover bad loans, including foreclosure, repossession, and other legal remedies.
9. Continuous Improvement: Improvement of loan administration based on experience with problem loans and the causes of default.
The administrative structure for loan management typically includes a loan committee, loan officers, and loan processors. The loan committee is responsible for setting lending policies and approving loans that exceed a certain dollar amount.
Loan officers are responsible for originating and underwriting loans, while loan processors handle administrative tasks such as document preparation and verification. The administrative structure may vary depending on the size and complexity of the institution, and may
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