Credit Analysis Basics-The ABCs of Underwriting

Author: David Osburn

This pro-active course will explore the “basics” of bank credit including the Five “Cs” of credit-capacity (cash flow), capital (debt versus equity), collateral (assets pledged), conditions (local, regional, national, and international economic conditions), and character (ethical “history” of the borrower).

Publication Date: August 2016

Designed For
CPAs, CFO/controllers, financial managers, auditors, financial analysts and practitioners who provide accounting, tax or consulting services to businesses.

Topics Covered

• The basics of the three (3) main areas of bank lending- consumer, mortgage, and commercial lending.
• Credit underwriting, the legal environment of credit, credit policy, and credit investigations.
• Review of making bank credit decisions, credit fraud, the importance of making customer visits, and bankruptcy proceedings.

Learning Objectives

• Recognize the five "Cs" of credit (capacity, capital, collateral, conditions, and character)
• Define the basics of the three (3) main areas of bank lending- consumer, mortgage, and commercial lending
• Explore credit underwriting, the legal environment of credit, credit policy, and credit investigations
• Review credit decisions, credit fraud, and customer visits
• Differentiate requirements for down payments under various loan scenarios
• Describe debt-to-income ratio
• Identify the SAW model and willingness to pay
• Recognize rules under the Fair Debt Collections Practices Act
• Identify best practices on defaulted loans and declaring bankruptcy
• Differentiate capacity cash flow and when lenders are likely to approve business loans
• Describe collection processes
• Recognize credit frauds and evaluate creditworthiness of a company/customer

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Accounting (2 hours)

Program Prerequisites
None

Advance Preparation
None