Just as current lending practices have evolved, so has the focus and importance of field exams. In the recent recession, many financial institutions have seen a significant decline in the profitability of their customers and therefore have had to rely on collateral for repayment. Upon liquidating the assets, many financial institutions have found the collateral to be inadequate to satisfy the outstanding debt and, consequently, have suffered significant losses. A properly designed field exam can help identify risks and trends that may be indicative of a deteriorating credit situation.
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Length: 2 pages (PDF 90 kB)