Explain why historical charge off and past due data may not represent the bank’s current portfolio credit risk.
Answer to relevant QuestionsExplain why a large bank may be willing to accept higher average loss rates on loans it is able to credit score. Rank the importance of the five basic credit issues described in the text. Explain why collateral alone does not justify extending credit. Cite examples, using real estate or agricultural products as collateral. Explain how an installment loan differs from revolving credit in terms of risk and the nature of the return to the lender. Why are home equity loans attractive today? How do some banks tie home equity loans to a customer’s credit card? How did the credit crisis and subprime problems of 2008– 2009 change the attractiveness of home equity ...
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