Portfolio Management

The resources for this topic can be found below. To view all of our available Resource Banks, click here.​

Wednesday, December 5, 2012

I.  Overview

  • CDFI Industry Analysis: Summary Report
  • Staff and board roles in portfolio and risk management
    • Federal Reserve Board Director’s Primer: This document provides guidance for bank directors on the role of the board of directors in overseeing a bank, and on relevant laws and regulations. Many of the concepts are applicable in thinking about the role of a CDFI Board in risk management and organizational oversight.
    • Loan Review Committee Charter People’s United Bank: This document is an example of the responsibilities that one lender assigns to its Loan Review Committee.
    • FDIC Pocket Guide for Directors: This website provides an overview of the roles and responsibilities of financial institution board members.
    • New Loan Process Map: This document provides an example of how one CDFI divided different aspects of the loan production process across its staff. The document is oriented toward CDFIs making commercial loans to businesses or nonprofit organizations.
    • Loan Servicing Process Map: This document provides an example of how one CDFI divided different aspects of the loan servicing, monitoring, and loss mitigation processes across organizational staff. The document is oriented toward CDFIs making commercial loans to businesses or nonprofit organizations, but aspects of it are applicable to other loan types.
    • Sample Portfolio Quality Committee Policy: This document describes the responsibilities of a CDFI Portfolio Quality Committee.
  • General tools and presentations on CDFI portfolio and risk management
    • OCC Loan Portfolio Management Comptrollers Handbook: This document provides 95 pages of recommendations for all areas of portfolio and risk management for loan portfolios, including but not limited to establishing the organization’s credit culture, loan policies, risk identification, exception tracking, stress testing, loss reserves, MIS, collections and work-outs, lending control functions, and loan review.
    • Aeris: Aeris provides third-party CAMEL assessments of CDFIs (CARS® Ratings) and analytic tools to help CDFIs understand and improve their financial and impact performance. CDFIs use their Aeris Ratings Report™ as an internal management tool to strengthen portfolio and other management practices. CDFIs also use the Aeris Cloud™ as a single repository for performance data that provides insight into trends and performance against peers. Visit: http://www.aeris.com
    • OFN Risk Management for Loan Programs: This presentation from a training session by the National Community Capital Association (now Opportunity Finance Network) provides an overview of certain key risk management topics including loan risk rating systems, loan loss reserves, and portfolio diversification.

II.  Loan Portfolio and Management Policies

  • The twelve elements of good loan policies
    • Loan Policies and Procedures - Accompanying presentation to a CDFI Fund Capacity Building Initiative webinar “Loan Policies and Procedures”
    • FDIC presentation on loan policies: This presentation provides a summary overview of why loan policies are important, common areas addressed in loan policies, and the "5 Ps” of credit (people, purpose, protection, payment, and prospects)
    • FDIC guidance outline for loan policies: This document provides an outline of topics that bank loan policies typically address.
    • Examples and tools for home financing lenders:
      • NeighborWorks Rochester Loan Policies: These loan policies are from NeighborWorks Rochester, which provides both home purchase assistance and home improvement loans. They include substantial guidance on the management of delinquent loans.
      • Mill Cities Community Investments Loan Policies: These loan policies are from Mill Cities Community Investments, in Lowell MA. Of particular interest is the loan risk rating system that is set out in the policies.
      • Loan Policies CFNMD: These loan policies are from the Community Fund of North Miami-Dade, which makes home improvement loans. The policies include a “Rehabilitation Policies” section on how home rehabilitation work financed by their loans is to be managed

III. Loan Files

  • Examples and tools for home financing lenders
    • Checklistlender: This document provides a checklist used by NHS Lehigh Valley to ensure that proper documents are in place for a mortgage loan.
    • Closed Loan Doc Checklist: This document provides a checklist used by NeighborWorks Rochester (NY) to ensure that proper documents are in place for a mortgage loan.
    • Home Improvement Loan File Checklist: This document provides a checklist used by NeighborWorks Rochester (NY) to ensure that proper documents are in place for a home improvement loan.
  • Examples and tools for business and microenterprise lenders

IV. Portfolio Reporting

V. Loan Risk Analysis and Risk Rating Systems

  • Overview
    • Portfolio monitoring matrix: This document provides an example of the loan monitoring activities a CDFI could undertake, and how the level of monitoring could increase for larger and riskier loans. It is oriented towards business loans, but certain concepts may be applicable to other types of loans.
    • Federal Reserve Bulletin, Risk Rating Systems at Large Banks: This document goes in-depth to review how large banks rate the risk of the loans they make. Note that the article is pre-housing crisis (1998).
    • Loan Risk Rating Sheet NESDCAP: An example of a loan risk rating scoring system used by a CDFI; aspects of it may be applicable to both business and residential loans.
  • Examples and tools for home financing lenders
    • See Mill Cities Community Investments Loan Policies in the “Loan and Portfolio Management Policies” section for home lending policies that contain a risk rating system for mortgage loans.
  • Examples and tools for real estate development lenders
  • Examples and tools for business and microenterprise lenders

VI. Loan Review and Quality Control

  • Overview
  • Examples and tools for home financing lenders
    • FHA Quality Control Handbook: This comprehensive document lays out FHA requirements and recommendations for the quality control measures that lenders should take to protect against risk stemming from the underwriting and servicing process, guard against fraud, and ensure compliance

VII. Managing Problem Loans

  • Overview
    • Credit Status and Action Items: This document provides a simple template that a CDFI could use to keep track of what needs to be done to work with its delinquent borrowers.
  • Examples and tools for business and microenterprise lenders
    • Problem Asset Quarterly Sample: This document provides an example of a detailed report that the loan officer would provide the Portfolio Quality Committee regarding the resolution of a problem business loan.

VIII. Loan Fund Financial Management

VIIII. Browse Portfolio Management Topics by Loan Type

Be sure to review all of the Portfolio Management topics for examples and tools that are relevant to your CDFI. Below are tools that are specific to particular lines of business and span one or more of the topical areas covered in the Portfolio Management section of the Resource Bank.

These documents were funded by the CDFI Fund, under Contract TPD-CDF-10-C-0006, Task Order 0001. The curriculum and opinions expressed in these documents are those of the authors, who are solely responsible for the content, and do not reflect the opinions of the CDFI Fund or any other person, entity, or organization.