Loan Documentation Procedure One of the important process in lending is loan documentation. This entails proper information and training to have a full understanding of what the documents signify, its relevance for the over-all efficiency of the product delivery as well as its impact on the over-all quality loan portfolio. To attain this, proper procedures should be strictly followed and completed.

Loan Documents Checklist Loan Application CI/BI Report Co-Signer’s Profile Loan Recommendation Sheet Promissory Note Discount Statement Loan Amortization Schedule READ THE SLIDE... Deed of Assignment of Deposit Security Agreement/Kasabutan Credit Memo for Savings Account or Cashier’s Check Signature Cards for Opening of Savings Account

Loan Application Basis for determining whether the applicant meets the basic eligibility criteria of the ABC Loan Given to the client after the client orientation session and submitted to the AO after completion AO should assist Clients who need help in completing the application if required. Should be properly filled out Signed by borrower and the co-borrower READ THE SLIDE... (After reading the slide, distribute a copy of the document to each of the participants. Then explain each relevant sections or items to be filled-up in the document. If necessary, show how the section or item which should be filled-up e.g. computations, or better yet, show a completed or fully-filled up loan document.) Can be handwritten. But if handwriting is not legible, should be typewritten With client’s picture ID and any other requirements

Credit Investigation Report Basis for determining the client’s character and capacity to pay Contains information about the client’s personal circumstances, assets, credit history, savings, details of his/her business, cash flow analysis, results of character checking, and the AO’s own assessment and recommendations on the loan application Prepared and signed by the AO Reviewed by the MFU Supervisor AO is responsible for verifying all information supplied in the CI report. Any false information deliberately supplied by the AO will be a cause for disciplinary action. Can be handwritten READ THE SLIDE... A similar CIBI report will be prepared for repeat loan applicants. The same procedure should be followed. This is one of the documents that objectively show WHO THE CLIENT IS- His family and credit background, in a word, this report tells us about a lot of salient pieces of information that the bank should seriously take a look at during the evaluation of the application and his/her over-all credit worthiness. It should be noted that all information gathered by the Account Officer should be TOTALLY & OBJECTIVELY COMPLETE. Any lacking information in the report will directly affect all the other contents of the loan documents. (After reading the slide, distribute a copy of the document to each of the participants. Then explain each relevant sections or items to be filled-up in the document. If necessary, show how the section or item which should be filled-up e.g. computations, or better yet, show a completed or fully-filled up loan document.)

Co-Maker’s Profile Prepared by the AO by interviewing the co-signer Signed by the co-signer after the interview Used to determine the eligibility of the person as co-signer Contains information about the co-signer’s personal circumstances, details of his/her occupation and income, relationship to the client, and his/her willingness to act as co-signer. Before the interview, AO should clearly explain to the person the responsibilities of a co-signer and the strict policy of the bank with regard to loan collection READ THE SLIDE... A similar document is available for repeat loans. Repeat loan applicants will have to fill a new form which also contain information about their loan history. (After reading the slide, distribute a copy of the document to each of the participants. Then explain each relevant sections or items to be filled-up in the document. If necessary, show how the section or item which should be filled-up e.g. computations, or better yet, show a completed or fully-filled up loan document.) Can be handwritten

Loan Recommendation Sheet Prepared by the AO Submitted to the Credit Committee along with the loan application and CI report Contains the highlights of the CI report Indicates the decision taken by the Credit Committee with regards to the loan application Can be handwritten READ THE SLIDE... This is the document that is very useful during the Credit Committee meeting. It summarizes all the information gathered by the AO-- his observations and his impressions toward the applicant. It should be noted that all the information summarized in this report are related with the other basic reports particularly the Credit and Background Investigation Reports. If during the CreComm meeting the AO will have an over-all negative or aversive feeling on his report, the decisions made by the CreComm members will be affected. Thus it is required that this document should be completely signed by the CreComm Chairman as well as the CreComm members. A loan should not be processed if this document is not properly signed. (After reading the slide, distribute a copy of the document to each of the participants. Then explain each relevant sections or items to be filled-up in the document. If necessary, show how the section or item which should be filled- up e.g. computations, or better yet, show a completed or fully-filled up loan document.)

Promissory Note Serves as the main loan document or evidence that the client has taken out a loan from the bank and agrees to the terms and conditions of the loan Indicates the date of PN, name of borrower, amount of loan, maturity date, interest rate and penalty charges, and other conditions of the loan Loan amortization schedule is attached to the PN Signed by the borrower(s), co-signer(s) at the bank immediately before loan release Also signed by the AO and MFU Supervisor as witnesses Prepare required number of copies (2 ) Should be checked by the MFU Supervisor to make sure that the completed PN is in order Should be typewritten READ THE SLIDE... (After reading the slide, distribute a copy of the document to each of the participants. Then explain each relevant sections or items to be filled-up in the document. If necessary, show how the section or item which should be filled- up e.g. computations, or better yet, show a completed or fully-filled up loan document.)

Disclosure Statement Shows amount of financial and non-financial charges to be deducted from the loan, and the net proceeds of the loan Also proves that the net proceeds have been received by the borrower Prepared necessary copies – the original copy of which is given to the borrower and copy/ies kept for file Checked by the bank accountant Signed by the borrower immediately after the proceeds of the loan are disbursed (through deposit or CC) Should be typewritten READ THE SLIDE... (After reading the slide, distribute a copy of the document to each of the participants. Then explain each relevant sections or items to be filled-up in the document. If necessary, show how the section or item which should be filled- up e.g. computations, or better yet, show a completed or fully-filled up loan document.)

Security Agreement Provides additional guarantee (aside from co-signer’s guarantee) for the loan from the borrower Indicates the type of assets owned and offered by the borrower to secure his/her loan, and the borrower’s consent to turn these assets over and allow them to be sold by the bank if s/he fails to comply with his/her obligation Prepared by the AO Signed by the borrower and spouse before loan disbursement Also signed by the AO and MFU supervisor as witnesses Can be handwritten READ THE SLIDE... (After reading the slide, distribute a copy of the document to each of the participants. Then explain each relevant sections or items to be filled-up in the document. If necessary, show how the section or item which should be filled- up e.g. computations, or better yet, show a completed or fully-filled up loan document.)

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