QUESTION THREE (20 POINTS) (a) What steps should a lender go through in trying to resolve a problem loan situation? (10 points) (b) What is the CAMELS rating and how is it used? (10 points) QUESTION FOUR (15 Points) (a) James Smith has asked for a $3,500 loan from Beard Center National Bank to repay some personal expenses. The bank uses a credit-scoring system to evaluate such requests, which contains the following discriminating factors along with their associated point weights in parentheses: Credit Rating (excellent 3; average 2; poor or no record 0) Time in Current Job (five years or more, 6; one to five years, 3) Time at Current Residence (more than 2 years, 4; one to two years, 2; less than one year, 1) Telephone in Residence (yes, 1; no, 0) Holds Account at Bank (yes, 2; no, 0) The bank generally grants a loan if a customer scores 9 or more points. Mr. Smith has an average credit rating, has been in his current job for three years and at his current residence for two years, has a telephone, but has no account at the bank. Is James Smith likely to receive the loan he has requested? Calculate the points for Mr. Smith and see if he gets the loan. (5 Points) (b) What factors should a lender consider in evaluating real estate loan applications? (5 points) I (c) Why do interest rates on consumer loans typically average higher than on most other kinds of loans? (5 Points) QUESTION FIVE (15 Points) (a) What are the principal differences among residential loans, nonresidential installment loans, noninstallment loans, and credit card or revolving loans? (8 Points)