What Examiners Think About Documentation

We've told you before: if it isn't documented in the loan file, it isn't true. That's the basic principle of documentation for lenders. What if the lender didn't put the documentation in the loan file, but kept notes somewhere else?

Examiners call this "the famous drop file." This is the file into which loan officers drop things they think they shouldn't lose but don't want anyone else to find unless it is needed - really needed.

Here's what examiners think: If it is important enough to make a note of, it is important enough to go in the loan file. Pulling it out later to answer an examiner's questions only looks suspicious. The better (actually best) practice is to document thoroughly as the loan application is processed.

Copyright © 1999 Compliance Action. Originally appeared in Compliance Action, Vol. 4, No. 11, 10/99