ALEXANDRIA, Va. — As credit unions navigate through choppy lending waters, the due diligence critical for member business loan underwriting and approval remains stable.
The risks vary in the member business lending area, but at least four stand out as the ones to pay particularly close attention to, according to NCUA's Office of Examination and Insurance. Those four are concentration risk, interest rate risk, transaction risk and reputation risk.
"There are also a variety of credit risks to consider, including whether loans are priced appropriately to reflect their inherent default risk, whether collateral values are periodically reevaluated and whether the systems and staffing are in place to properly manage loan defaults," NCUA told Credit Union Times in a recent response to a query on the key member business lending risks.
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