Introduction to the Credit Lifecycle & Credit Documents
“The life and times of credit”
Facilitator Guide
Training Department
10/2010
1.0
Introduction to the Credit Lifecycle & Credit Documents
“The life and times of credit”
Participant Guide
Version: 1.0
Version Date: 10/2010
Getting StartedFacilitator Guide
About This Document
Document History
Version Number / Version Date / Owner / Comments orDescription of Changes1.0 / 10/2010 / Sandy Ballard / Initial draft for pilot
Document File Name and Location
File Name / File Retention LocationCredit Lifecycle & Credit Documents / Shared Drive
Table of Contents
About This Document
Document History
Document File Name and Location
Table of Contents
Getting Started
Course Overview
Course Preparation and Completion
Facilitator Guide Icons
Introduction to the Credit Lifecycle and Credit Documents
“The life and times of credit”
Module Overview
Introduction to the Credit Lifecycle and Credit Documents
“The life and times of credit”
Module Overview
Introduction
Pre-Requisite
Learning Objectives
The Credit Lifecycle
The Credit Lifecycle
Phases of the Credit Lifecycle
Customer and Lender needs
Credit Lifecycle Activity
Credit Documents
Credit Documents
Customer and Lender wants/needs and credit documents
Electronic Filing and Credit Documents
Credit Documents Inbox Activity
Appendix
Appendix
Instructions
Getting Started
Course OverviewIntroduction / This blended learning course describes the phases of the credit lifecycle and introduces participants to common credit documents used throughout the lifecycle of a credit product such as a loan or a line of credit. This is a two-part course:
- Part one is an online tutorial
- Part two is an instructor-led session
Purpose / The purpose of this course is to familiarize learners with the credit lifecycle at $ome Financial Company and commonly used documents throughout the lifecycle.
Requirements / This course should only be delivered to participants who have successfully completed new hire orientation as well as credit product training.
Learning Objectives / After completing this course, participants will be able to:
- Identify the phases of the credit lifecycle (Sales, Underwriting, Servicing) fora typical credit product such as a loan or a line of credit.
- Determine in which phase of the credit lifecycle a document falls.
Estimated Time to Complete / The estimated length of time for this course is:
15 - 30 minutespre-class online tutorial
2 - 3 hoursinstructor-led session
Total 2 ¼ - 3 ½ hours over 2 sessions
Course Preparation and Completion
Facilitator Pre-Work / Two weeks before facilitating the course:
- Send the URL below for the pre-work tutorial via email to all participants
- Send the participant materials for printing
One day before facilitating the course:
- Send a course reminder
- Verify online completion for all participants in learning management system
- Set up the training room (see below) and distribute materials
Classroom Set-Up / For the most effective delivery and participant experience, set-up the training room as follows:
For average class size of 10-15
- Small table groups of 3-5 people for group activities
- 3 Flip chart easels or flip chart papers posted on the wall
Required Materials / The following materials are required to facilitate this course:
Material / Module
Online course access / Pre-class tutorial
Facilitator & Participant Guides, accompanying PPT file / Instructor-led session
3 Flip Charts easels or self sticking flip chart paper (pre-labeled) Sales, Underwriting, Servicing / Instructor-led session
(optional) Three kinds of candy for dividing small groups / Instructor-led session
Facilitator Guide Icons
The following icons are used in this guide as visual cues to direct you in what to do, say, or use throughout the training.
Icon / Description / Icon / Description / Icon / Description/ Open a discussion with the class. / / Play a corresponding video. / / Point out an item to the class.
/ Refer to the Participant Guide. / / Display a corresponding overhead transparency or use a digital projector to display your computer. / / Display a corresponding PowerPoint presentation slide.
/ Use a wall chart. / / Use computers for demonstration or follow-along. / / Tie a current topic back to previous information.
/ Distribute a hand out. / / Take note of a reminder. / / Transition from one topic to the next topic.
/ Facilitate an activity.
The Life and Times of CreditTraining Example1
10/2010ALOP 263
Getting StartedFacilitator Guide
Introduction to the Credit Lifecycle and Credit Documents
“The life and times of credit”
Module Overview/ Direct participants to page 1 in the PG.
Review the information on page 1 in the PG with participants.
Introduction
/ Facilitator: Display PPT S1. Display PPT S2. Say:
This course describes the phases of the credit lifecycle and introduces you to common credit documents used throughout the lifecycle of a credit product such as a loan or a line of credit. This is a two-part course:
- Part one was the online tutorial (that hopefully everyone had a chance to complete)
- Part two is this instructor-led session
Pre-Requisite
/ Facilitator: Ensure all participants have completed the online tutorial.[Depending on business arrangement, class time may be allotted for online tutorial. If pre-arranged, have participants complete the online tutorial at this time.]Engage group in discussion. Say:
Did everyone have an opportunity to complete the online tutorial?
Facilitator: Display PPT S3. Debrief the tutorial by asking participants:
What questions do you have from the tutorial?
Who here has applied for credit in the past? Was your experience similar?
Learning Objectives / Facilitator say:
Our discussion ties in nicely with the learning objectives for this course. Let’s take a look at the learning objectives now.
After completing this course, you will be able to:
- Identify the phases of the credit lifecycle (Sales, Underwriting, or Servicing) for a typical credit product such as a loan or a line of credit.
- Determine in which phase or phases of the credit lifecycle common documents are used.
Introduction to the Credit Lifecycle and Credit Documents
“The life and times of credit”
Module OverviewIntroduction / This course describes the phases of the credit lifecycle and introduces you to common credit documents used throughout the lifecycle of a credit product such as a loan or a line of credit. This is a two-part course:
- Part one - online tutorial
- Part two - classroom session
Pre-Requisite / You should have already completed the online tutorial prior to attending the classroom session.
Learning Objectives / After completing this course, you will be able to:
- Identify the phases of the credit lifecycle (Sales, Underwriting, Servicing) for a typical credit product such as a loan or line of credit.
- Determine in which phase(s) of the credit lifecycle common documents are used.
The Life and Times of CreditTraining Example1
10/2010ALOP 263
Credit LifecycleFacilitator Guide
The Credit Lifecycle/ Direct participants to page 2 in the Participant Guide.
Review the information on page 2with the participants.
/ Facilitator: Say:
During the Credit Lifecycle online tutorial, you learned about the three phases of the Credit Lifecycle: Sales, Underwriting and Servicing. As you read the customer story of the Balentines, you reviewed the events that occurred during each of the three phases.
You were also asked to think about what the customer and lender wants/needs might be at each phase in the cycle. Now you will have an opportunity to capture your thoughts about the customer and lender needs.
/ Display Previously Prepared Flip Charts and PPT S4.
Facilitator Say:
In the room we have three flip charts labeled with the three phases of the Credit Lifecycle. In a few moments we will divide into three groups.
As a small group, discuss what you think the customer and the lender ($ome Financial Company) might want/need at that phase in the Credit Lifecycle for your assigned flip chart and capture your thoughts. (Detailed instructions are found on page 2 in your guide)
/ Facilitate the Activity (allow 5- 8 minutes for each round)
Divide the participants into three groups using one of the following methods (or a method of your own choosing):
- Ask participants to count-off by threes
- Ask participants to choose one of three types of candy. ( Bring candy)
The Credit Lifecycle
Phases of the Credit Lifecycle / During the Credit Lifecycle online tutorial, you learned about the three phases of the Credit Lifecycle. As you read the customer story of the Balentines, you reviewed the events that occurred during each of the three phases:
- Sales
- Underwriting
- Servicing
Customer and Lender needs / While you reviewed the tutorial you were asked to think about what the customer and lender needs might be at each phase in the cycle; now you will have an opportunity to capture your thoughts about the customer and lender needs.
Credit Lifecycle Activity
/ In the room you will find three flip charts labeled with the three phases of the Credit Lifecycle. Your facilitator will divide your class into three groups, one group for each flip chart.
As a small group, discuss what you think the customer and the lender ($ome Financial Company) might need at that phase in the Credit Lifecycle for your assigned flip chart. For example, during the Sales process, the customer might want to know what credit products are available; the lender might need to know what assets the customer has to secure a loan.
- Capture your thoughts from your small group discussion on each half of your assigned flip chart.
- Use the example flip chartson the following pages to copy the ideas from each flip chart at the end of this activity.
- Be prepared to share your thoughtswith the large group.
The Credit Lifecycle, continued
/ Direct participants to page 3 in the Participant Guide.
Advise participants to capture the results of each flip charton the corresponding page.
/ Display Previously Prepared Flip Charts
Possible group answers are provided below
Sales
Customer wants/needs / Lender wants/needs
- Money
- Information about credit
- Understanding
- To know what the process is to get money
- Find out how much money the customer needs and why the customer needs the money
- Information about customer assets, income and collateral
The Credit Lifecycle, continued
Sales
Customer wants/needs / Lender wants/needs
The Credit Lifecycle, continued
/ Direct participants to page 4 in the Participant Guide.
Advise participants to capture the results of each flip chart on the corresponding page.
/ Display Previously Prepared Flip Charts
Possible group answers are provided below
Underwriting
Customer wants/needs / Lender wants/needs
- Money, when will he/she get the money
- To know how much payment will be
- To know what fees he has to pay
- Customer credit report/history
- Customer income documents
- Property appraisal
- List of customer assets
The Credit Lifecycle, continued
Underwriting
Customer wants/needs / Lender wants/needs
The Credit Lifecycle, continued
/ Direct participants to page 5 in the Participant Guide.
Advise participants to capture the results of each flip chart on the corresponding page.
/ Display Previously Prepared Flip Charts
Possible group answers are provided below
Servicing
Customer wants/needs / Lender wants/needs
- To know how much payment is
- To know when payment is due
- To ask, “What if I can’t make my payment?”
- To ask, “Why did my payment change?”
- (money) Customer to make payments
- Retain customer business
- Offer new business products to restart cycle
The Credit Lifecycle, continued
Servicing
Customer wants/needs / Lender wants/needs
Credit Documents
/ Debrief the Credit Lifecycle Activity
Facilitator: Say:
Let’s look at the results of our flip chart activity and how this leads us to the next part of our session focusing on credit documents. As you probably know if you’ve ever borrowed money, the financial services industry is well known for its many documents! The standing joke at any loan closing is that you will get writer’s cramp just from signing all the paper work.
Although there seems to be an abundance of paper work, each of those documents you sign has a purpose. The primary purpose for most of the documents is to fulfill a customer or lender want or need.
/ Transition to the Credit DocumentActivity
Facilitator: Say:
Let’s look at one of our flip charts: Sales for example. [Usually ‘money’ is one of the answers but if not say: “one of the want/needs here might have been money.”] Everyone wants money! The customer would like to borrow money; the agent would like a commission. One of the common documents you see in the Sales phase is the product brochure. Product brochures tell the customer about the various money products we offer and help the banker or sales agent make the sale.
/ Direct participants to page 6 in the Participant Guide.
As a $ome Financial Services company team member, you will be responsible for correctly identifying in which phase(s) a particular credit document occurs so that you can electronically file the document. All documentation sent from and received at $ome Financial company is electronically filed in our Electronic Paper Management (EPM) system.
/ Facilitate the Credit Document Inbox Activity (allow 3- 5 minutes for each document in the Appendix)
Display PPT S5.
Ask a participant to volunteer to read the Credit Documents Inbox Activity instructions to the class.
Have participants complete the activity in small groups. Make rounds to group during the activity to answer any questions.
Credit Documents
Customer and Lender wants/needs and credit documents / Review the customer and lender wants and needs you identified in your flip chart activity. As you may already be aware, the financial services industry is well known for its many documents! A significant amount of time is spent working with credit documents during most customer interactions. Although there may seemto be an abundance of paper work, each of the documents we work with has a purpose. The primary purpose of most of these documents is to fulfill a customer or lender want or needs you have captured in your flip charts.
Electronic Filing and Credit Documents / As a $ome Financial Services company team member, you will be responsible for correctly identifying the phase(s) that a particular credit document occurs in so that you can electronically file the document. All documentation sent from and received at $ome Financial company is electronically filed in our Electronic Paper Management (EPM) system.
Credit Documents Inbox Activity
/ In the Appendix you will find various credit documents that are used throughout the three phases of the Credit Lifecycle.
As a small group, discuss which phase or phases you believe each of the credit documents might be used. As you read each description, compare the details to the wants and needs you identified in the flip chart activity to help you determine the phase.
- Capture your answers from your small group discussion in the third column of the summary table.
- Be prepared to share your decisions with the large group.
Appendix
/ Direct participants to page 7in the Participant Guide.
/ Explain / Discuss
Ask participants if there are any questions about the instructions for the activity
/ Refer to Appendix
Answers to the exercise are provided below
# / Name and Description/Purpose of the document / Phase(s) of the Credit Lifecycle in which this document should be electronically filed
Good Faith Estimate
The Good Faith Estimate is estimate of settlement charges and loan terms provided to customers if they are approved for a credit product. / Underwriting
Form 1003 – Universal Residential Loan Application
The Universal Residential Loan Application is designed to be completed by the applicant(s) with the lender’s assistance and provides details about the applicant’s financial request. / Sales
Form 1004 – Universal Residential Appraisal Report
The Universal Residential Appraisal Report provides lenders with an accurate, and adequately supported, opinion of the value of a property. / Underwriting
Form 65A – Statement of Assets and Liabilities
The Statement of Assets and Liabilities is completed by an applicant and provides lenders with details of the applicant’s assets such as checking, savings, IRA and 401k accounts, as well as liabilities such as credit cards, loan and line payments, etc. / Sales
Appendix
Instructions
/ Review the descriptions below and the details on each form that follows in the Appendix.
Complete the third column of the table by indicating in which phase(s) of the Credit Lifecycle the document should be electronically filed.
# / Name and Description/Purpose of the document / Phase(s) of the Credit Lifecycle in which this document should be electronically filed
Good Faith Estimate
The Good Faith Estimate is estimate of settlement charges and loan terms provided to customers if they are approved for a credit product.
Form 1003 – Universal Residential Loan Application
The Universal Residential Loan Applicationis designed to be completed by the applicant(s) with the lender’s assistance and provides details about the applicant’s financial request.
Form 1004 – Universal Residential Appraisal Report
The Universal Residential Appraisal Report provides lenders with an accurate, and adequately supported, opinion of the value of a property.
Form 65A – Statement of Assets and Liabilities
The Statement of Assets and Liabilities is completed by an applicant and provides lenders with details of the applicant’s assets such as checking, savings, IRA and 401k accounts, as well as liabilities such as credit cards, loan and line payments, etc.
Appendix, continued
/ Direct participants to page 8 in the Participant Guide.
/ Refer to Appendix
Answers to the exercise are provided below
# / Name and Description/Purpose of the document / Phase(s) of the Credit Lifecycle in which this document should be electronically filed
Form 1020 – Borrower’s Financial Statement
The Borrowers Financial Statement is completed by customers who are experiencing a financial hardship and are struggling to make payments on their credit products. / Servicing
Standard Mortgage Note
The Standard Mortgage Note is created by the lender upon approval of the credit product and provides the customer with details regarding payments, interest, due dates and fees. / Underwriting
W2 Wage and Tax form
The W2 is a government income form provided to wage earners that indicates total annual income from an employer. / Underwriting
Form 1021 –HAMP Hardship Affidavit
The HAMP Hardship Affidavit is completed by customers who are experiencing financial difficulties due to one or more changes in their financial situation and who are requesting a review of their payment plan under the government Making Home Affordable Program. / Servicing
Appendix, continued
# / Name and Description/Purpose of the document / Phase(s) of the Credit Lifecycle in which this document should be electronically filed
Form 1020 – Borrower’s Financial Statement
The Borrowers Financial Statement is completed by customers who are experiencing a financial hardship and are struggling to make payments on their credit products.
Standard Mortgage Note
The Standard Mortgage Note is created by the lender upon approval of the credit product and provides the customer with details regarding payments, interest, due dates and fees.
W2 Wage and Tax form
The W2 is a government income form provided to wage earners that indicates total annual income from an employer.
Form 1021 –HAMP Hardship Affidavit
The HAMP Hardship Affidavit is completed by customers who are experiencing financial difficulties due to one or more changes in their financial situation and who are requesting a review of their payment plan under the government Making Home Affordable Program.
Appendix, continued
/ Direct participants to page 9in the Participant Guide.
/ Refer to Appendix
Answers to the exercise are provided below
# / Name and Description/Purpose of the document / Phase(s) of the Credit Lifecycle in which this document should be electronically filed
HUD-1
The HUD-1 is a government form lenders are required to provide to borrowers detailing all aspects of a credit product including settlement details, fees and adjustments / Underwriting
Mortgage Statement
The Mortgage Statement is completed by the lender and provides the borrower with details and risks associated with a real estate secured product. / Underwriting, Servicing
Credit Report
A Credit Report is requested by lenders and provides borrower history of payment on various types of accounts, or tradelines, as well as account history information, public records of any bankruptcies and an accumulative FICO (Fair Isaacs Company) score. / Underwriting. Servicing
Request for Verification of Employment form
The Request for Verification of Employment form is sent by lenders to validate a borrower’s stated employment and income information from a credit product application. / Sales, Underwriting
Appendix, continued
# / Name and Description/Purpose of the document / Phase(s) of the Credit Lifecycle in which this document should be electronically filed
HUD-1
The HUD-1 is a government form lenders are required to provide to borrowers detailing all aspects of a credit product including settlement details, fees and adjustments
Mortgage Statement
The Mortgage Statement is completed by the lender and provides the borrower with details and risks associated with a real estate secured product.
Credit Report
A Credit Report is requested by lenders and provides borrower history of payment on various types of accounts, or tradelines, as well as account history information, public records of any bankruptcies and an accumulative FICO (Fair Isaacs Company) score.
Request for Verification of Employment form
The Request for Verification of Employment form is sent by lenders to validate a borrower’s stated employment and income information from a credit product application.
The Life and Times of CreditTraining Example1