Depository and Lending Institution, Banks and Savings Institution, Credit Union, Finance

Companies and Mortgage Companies

BANKS - Depository Institutions. Receive money from depositors to lend out to borrowers.
Serve as financial intermediaries. The net worth of a bank is equal to its bank capital which is
equal to total assets minus its total liabilities.
FUNCTIONS OF DEPOSITORY INSTITUTIONS
 Serves as a link between public companies and investors/shareholders
 Eliminates risk related to owning physical financial securities
 Allows the provision of loans of mortgages to interested parties
 Reduced paperwork and accelerates the process of transferring securities
BANK ASSETS- USES OF FUNDS
1. Cash - Reserve requirements refer to the percentage of bank deposits and deposit
substitute liabilities that banks must set aside in deposits with the BSP which they
cannot lend out, or where available through reserve-eligible government securities.
2. Securities - secondary reserves
3. Loans - biggest assets of banks
4. Other assets, which includes real property, such as equipment, buildings, land, and
repossessed collateral from borrowers who have defaulted.
BANK LIABILITIES SOURCES OF FUNDS
 Deposits are considered a liability because it is money that is owed to its customers.
 Deposits are money that the banks customers place in the bank for safekeeping, to
provide payment services, and to earn interest. Deposits can be classified as either
checkable deposits or non-transaction deposits.
 Banks can pay a lower rate of interest on deposits because the funds that they hold are
guaranteed by the Philippine Deposit Insurance Corporation (PDIC) up to a certain limit.
 Checkable deposits - Transaction deposits. Deposits placed in checking accounts that
allow the depositors to withdraw money at will, write checks, and transfer funds
electronically to and from the account.
 Non-transaction deposits - deposits in savings and time deposit accounts, where
withdrawals are limited.
TYPES OF DEPOSITORY INSTITUTIONS
1. Commercial banks
 Provide the widest variety of banking services
 For-profit organizations and generally owned by private investors
 A financial institution that accepts deposits, offers checking account services, makes
various loans, and offers basic financial products like certificates of deposit (CDs) and
savings accounts to individuals and small businesses
2. Savings institutions
 Thrift institutions
 Banks that serve a local community
 Place a stronger emphasis on residential mortgages
3. Credit unions
 Is a type of financial cooperative that provides traditional banking services
 Members pool their money in order to be able to provide loans, demand deposit
accounts, and other financial products and services to each other.
Power and Scope of Authorities (Commercial Banks)
In addition to the general powers incident to corporations and those provided in other laws, a
commercial bank shall have the authority to exercise all such powers as may be necessary to
carry on the business of commercial banking such as:
  accepting drafts and issuing letters of credit;
 discounting and negotiating promissory notes, drafts, bills of exchange, and other
evidences of debt;
 accepting or creating demand deposits;
 receiving other types of deposits and deposit substitutes;
 buying and selling foreign exchange and gold or silver bullion;
 acquiring marketable bonds and other debt securities;
 And extending credit, subject to such rules as the Monetary Board may promulgate.
Certificate of Authority to Register
The certificate shall not be issued unless the Monetary Board is satisfied from the evidence
submitted that:
a) All requirements of existing laws and regulations to engage in the business for which the
applicant is proposed to be incorporated have been complied with;
b) The public interest and economic conditions, both general and local, justify the
authorization;
c) The amount of capital, the financing, organization, direction and administration, as well
as the integrity and responsibility of the organizers and administrators reasonably
assure the safety of deposits and the public interest.
Minimum Capitalization

Commercial Banks Savings Institutions

 Head Office only – P2 billion  Head Office only – P200 million
 Up to 10 branches – P4 billion  Up to 10 branches – P300 million
 11 to 100 branches – P10 billion  11 to 50 branches – P400 billion
 More than 100 branches – P15 billion  More than 50 branches – P800 billion

Internal Audit Function

 Internal audit is an independent, objective assurance and consulting function
established to examine, evaluate and improve the effectiveness of internal control, risk
management and governance systems and processes of an organization, which helps
management and the board of directors in protecting the bank and its reputation.
 The internal audit charter shall establish, among others, the following:
a) a. Purpose, stature and authority, and responsibilities of the internal audit function
as well as its relations with other control functions in the bank;
b) b. Standards of independence, objectivity, professional competence and due
professional care, and professional ethics;
c) c. Guidelines or criteria for outsourcing internal audit activities to external experts;
d) d. Guidelines for consulting or advisory services that may be provided by the internal
audit function;
e) e. Responsibilities and accountabilities of the head of the internal audit function;
f) f. Requirement to comply with sound internal auditing standards such as the
Institute of Internal Auditor’s International Standards for the Professional Practice of
Internal Auditing and other supplemental standards issued by regulatory
authorities/ government agencies, as well as with relevant code of ethics; and
g) g. Guidelines for coordination with the external auditor and supervisory authority.
Scope of Internal Audit
The scope of internal audit shall cover, among others, the following:
a) Evaluation of the adequacy, efficiency and effectiveness of internal control, risk
management and governance systems in the context of current and potential future
risks;
 b) Review of the reliability, effectiveness and integrity of management and financial
information systems, including the electronic information system and electronic banking
services;
c) Review of the systems and procedures of safeguarding the bank’s physical and
information assets;
d) Review of compliance of trading activities with relevant laws, rules and regulations;
e) Review of the compliance system and the implementation of established policies and
procedures; and
f) Review of areas of interest to regulators such as, among others monitoring of
compliance with relevant laws, rules and regulations, including but not limited to the
assessment of the adequacy of capital and provisions; liquidity level; regulatory and
internal reporting.
External Financial Audit
The report to the Bangko Sentral shall be accompanied by the:
1. certification by the external auditor on the:
a. dates of start and termination of audit;
b. (b) date of submission of the financial audit report and certification under
oath stating that no material weakness or breach in the internal control and
risk management systems was noted in the course of the audit of the bank to
the board of directors or country head; and
c. (c) the absence of any direct or indirect financial interest and other
circumstances that may impair the independence of the external
auditor;
2. Reconciliation Statement between the AFS and the balance sheet and income statement
for bank proper (regular and FCDU) and trust department submitted to the Bangko
Sentral including copies of adjusting entries on the reconciling items; and
3. Other information that may be required by the Bangko Sentral.
Disclosure of external auditor’s adverse findings to the Bangko Sentral
Banks shall require their external auditors to report to the Bangko Sentral any matter adversely
affecting the condition or soundness of the bank, such as, but not limited to:
1. Any serious irregularity, including those involving fraud or dishonesty, that may
jeopardize the interest of depositors and creditors;
2. Losses incurred which substantially reduce the capital funds of the bank; and
3. Inability of the auditor to confirm that the claims of creditors are still covered by the
bank’s assets.
Credit Union
 member-owned financial cooperative organized from a group of people with a common
bond,
 Democratically controlled by its members and operating for the purpose of providing
financial services to its members.
 organized as not-for-profit entities
Credit Union VS Bank

Credit Union Bank

 Not-for-profit cooperatives offer a full
range of financial products and
services to their members.
 Earnings are returned to members
through services like free ATMs,
better rates, and lower fees.
 Insured though NCUA up to $250,000.
 For-profit corporations offer a full
range of financial products and
services.
 Earnings go to outside stockholders in
the form of dividends.
 Insured by FDIC up to $250,000.
 Banks are governed by paid
  Owners and members live and work shareholders. Voting rights depend on
in their local community. Credit the number of shared owned.
Unions are democratically governed
and elections are based on a one-
member, one-vote philosophy.

Members
1. Board of Directions
 establishes the general operation of a credit union and ensures that it follows applicable
laws and regulations and adheres to its bylaws
 responsible for ensuring that a credit union maintains its financial stability, follows good
business practices, and is properly insured and bonded
2. Credit Committee
 establishes and monitors a credit union's lending policies, approves loan applications,
and provides credit-counseling services to members
3. Supervisory Committee
 responsible for ensuring that member funds are protected, financial records and
operations are in order, and elected officials carry out their duties properly
 shall make or cause to be made an annual audit and shall submit a report of that audit
to the board of directors and a summary of the report to the members at the next
annual meeting of the credit union
 Shall make or cause to be made such supplemental audits as it deems necessary or as
may be ordered by the board, and submit reports of the supplementary audits to the
board of directors.
Financial Structure
 credit unions' primary source of funds is members' share and savings account deposits
 to be entitled to membership, each member must generally own at least one share in
the credit union
 use the funds from these shares and other members' savings accounts to make loans to
members and to make investments
Overview of Credit Union Network
1. Leagues (or federations) - are generally national affiliations of credit unions. Leagues
are formed at the state or provincial level.
2. Associations (or confederations) - are regional groupings of leagues within the same
area. These may be continental.
 3. World Council of Credit Unions (WOCCU) - an international credit union organization,
formed of seven associations and four free-standing leagues.

WORLD COUNCIL OF CREDIT UNIONS – Regional Level

 AFRICA CONFEDERATION OF CO-OPERATIVE SAVINGS AND VCREDIT ASSOCIATIONS
(ACCOSCA)
 ASIAN CONFEDERATION OF CREDIT UNIONS (ACCU)
 AUSTRALLIAN FEDERATION OF CREDIT UNIONS, LTD.
 CANADIAN COOPERATIVE CREDIT SOCIETY (CCCS)
 CARABBEAN CONFEDERATION OF CREDIT UNION (CCCU)
 CREDIT UNION NATIONAL ASSOCIATION - USA (CUNA)
 LATIN AMERICAN CONFEDERATION OF CREDIT UNIONS (COLACS)
Annual Audit
Federal Charters

Asset size Audit Requirement

$500 million or more Financial statement audit performed in
accordance with
generally accepted auditing standards by a
CPA
more than $10 million but less than $500 Either financial statement audit or
million supervisory committee audit
$10 million or less Supervisory Committee audit

State Charter

Asset size Audit Requirement

$500 million or more Financial statement audit
Less than $500 million Supervisory Committee Audit unless audit
prescribed by State law

Supervisory Committee - Annual Audit

Supervisory Committee audit alternatives to a financial statement audit.
 A credit union which is not required to obtain a financial statement audit may fulfill its
supervisory committee responsibility by obtaining an Other Supervisory Committee
Audit.
 Such an audit is one that is performed by the supervisory committee, its internal
auditor, or any other qualified person (such as a certified public accountant, public
accountant, league auditor, credit union auditor consultant, retired financial institutions
examiner, etc.) that satisfies the minimum requirements. Qualified persons who are not
State-licensed cannot provide assurance services under this section NCUA's current
Audit Guide states that supervisory committee audits must be conducted by someone
"having adequate technical training and proficiency as an auditor commensurate with
the level and sophistication and complexity of the credit union under audit." (This is
based on NCUA's rule, 12 CFR 701.21(c) (2) (i).)
 The Audit Guide provides that an auditor should have an accounting degree unless the
credit union is small and offers core services only. In that case, experience with double-
entry bookkeeping would be sufficient. The Audit Guide provides that an understanding
of auditing procedures, the Federal Credit Union Act and related documents are also
essential.
 Section 115 of the Federal Credit Union Act specifies that the supervisory committee :
1. make an annual audit and report the findings of this audit to the members;
2. make supplemental audits as deemed necessary;
 3. suspend any officer, credit committee or board member if misconduct is
revealed;
4. call special membership meetings to resolve major problems ;
5. examine and verify the passbooks or account records of each member every two
years
 According to the Supervisory Committee Manual. The primary function of the
committee is to make internal audits designed to determine that: (1) accounting records
and reports are prepared promptly and accurately reflect operations and their results;
(2) established internal controls are effectively maintained and adequately protect the
credit union, its members, its management, and its employees; and (3) each unit of the
credit union is carrying out the plans, policies, and procedures for which it is
responsible.
 The supervisory committee also appraises policies; provides safeguards against error,
carelessness and fraud; and assists management in carrying out the purposes of the
organization.
 Supervisory Committee Manual specifies the following as minimum audit procedures to
be performed by the supervisory committee during an annual audit:

1. Cash count. 12. Review of other asset and liability

2. General ledger trial balance.
3. Bank reconcilement.
4. Trial balance of members' ledgers.
5. Review of investments and investment
transactions.
6. Review of loans to members.
7. Review of borrowing transactions.
8. Review of reserve accounts.
9. Review of undivided earnings.
10. Review of expenses
11. Review of furniture, fixtures, and
equipment
accounts.
13. Review of security devices and
procedures.
14. Review of financial and statistical reports.
15. Review of surety bond and other
insurance.
16. Review of board of directors’ minutes.
17. Review of credit committee minutes.
18. Survey of internal controls.
19. Verification of members' accounts

Requirements for verification of accounts and passbooks:

A. Verification obligation.
 The Supervisory Committee shall, at least once every two years, cause the passbooks
(including any book, statements of account, or other record approved by the NCUA
Board) and accounts of the members to be verified against the records of the treasurer
of the credit union
METHOD
1) Controlled verification - A controlled verification of 100 percent of members' share and
loan accounts;
2) Statistical method - A sampling method which provides for:
i. Random selection:
ii. A sample which is representative of the population from which it was
selected;
iii. An equal chance of selecting each dollar in the population;
iv. Sufficient accounts in both number and scope on which to base conclusions
concerning management's financial reporting objectives;
v. Additional procedures to be performed if evidence provided by
confirmations alone is not sufficient.
3) Non-statistical method.
i. Sufficient accounts in both number and scope on which to base conclusions
concerning management's financial reporting objectives to provide assurance
 that the General Ledger accounts are fairly stated in relation to the financial
statements taken as a whole;
ii. Additional procedures to be performed by the auditor if evidence provided by
confirmations alone is not sufficient; and
iii. Documentation of the sampling procedures used and of their consistency with
GAAS (to be provided to the NCUA Board upon request).
B. Retention of records. The supervisory committee must retain the records of each
verification of members' passbooks and accounts until it completes the next verification
of members' passbooks and accounts.
Internal Audit
The internal audit plan should be based on the risk assessment carried out by the internal audit
function and should cover the following at a minimum:
 the objectives and scope of the internal audit plan;
 organizational arrangements setting out the roles and responsibilities of key
 personnel involved in implementing the internal audit plan;
 a detailed work program including priority areas to be audited and timelines for
completion of the work;
 how the work is to be performed, including audit procedures and tests to be performed;
and
 The process and timelines for review and approval of the internal audit plan by the
board of directors and for ensuring the plan is updated.
Independence of the internal audit function
The board of directors should, at a minimum, ensure that the internal audit function:
 is appointed at a senior level to ensure that the internal audit function has appropriate
standing and authority within the credit union;
 is separate from other functions and does not engage in any other activity of the credit
union, avoids conflicts of interests and is capable of operating independently of
management and without undue influence over its activities;
 has unrestricted and timely access to records, personnel and physical property of the
credit union;
 is free to report its findings and assessment through clear reporting lines to the board of
directors (or audit committee where one exists) and has access to the board of directors
(or audit committee where one exists); and
 is not remunerated on the basis of the financial performance of the credit union but on
its performance in carrying out its functions
Internal audit reporting
The report should cover the following at a minimum:
 the internal audit objectives, scope and work undertaken;
 an overall opinion on the effectiveness of the credit union’s risk management, internal
controls and governance processes;
 internal audit findings including any weaknesses identified and the causes of such
weaknesses;
 recommendations, ranked by priority, to address identified weaknesses;
 proposed action plans, including timelines, to implement recommendations;
 an update on the implementation of action plans previously agreed by the board of
directors (or audit committee where one exists) including the status of open items
Audit by alternative licensed person
The NCUA Board may compel a federal credit union to obtain a supervisory committee audit
which meets the minimum requirements, and which is performed by an independent person
who is licensed by the State or jurisdiction in which the credit union is principally located, for
any fiscal year in which any of the following three conditions is present:
1. The Supervisory Committee has not obtained an annual financial statement audit or
performed a supervisory committee audit; or
2. The Supervisory Committee has obtained a financial statement audit or performed a
supervisory committee audit which does not meet the requirements of part 715
including those in § 715.8.
3. The credit union has experienced serious and persistent recordkeeping deficiencies
Financial statement audit required
 The NCUA Board may compel a federal credit union to obtain a financial statement audit
performed in accordance with GAAS by an independent person who is licensed by the
State or jurisdiction in which the credit union is principally located, for any fiscal year in
which the credit union has experienced serious and persistent recordkeeping
deficiencies as defined in paragraph
 The objective of a financial statement audit performed under this paragraph is to
reconstruct the records of the credit union sufficient to allow an unqualified or, if
necessary, a qualified opinion on the credit union's financial statements. An adverse
opinion or disclaimer of opinion should be the exception rather than the norm.
Finance Companies
Corporations primarily organized for the purpose of extending credit facilities to consumers and
to industrial, commercial, or agricultural enterprises:
 by direct lending; by discounting or by factoring commercial papers or accounts
receivable
 by buying and selling contracts, leases, chattel mortgages, or other evidences of
indebtedness
 by financial leasing of movables as well as immovable property
It does not include banks, investment houses, savings and loan associations, insurance
companies, cooperatives, and other financial institutions organized or operating under other
special laws. [R.A. 8556]
Finance Companies: Sources of Funds

1. Debt Capital 2. Retained Earnings 3. Equity Capital

 bank loans
 corporate bonds

Finance Companies: TYPES

1. COMMERCIAL - Loans granted to businesses for use in an enterprise.
 Factoring
 Leasing
 Floor Plan Loans
2. CONSUMER - Loans to individuals for personal uses.
 refinance small debts
 Purchase of large household items
 mortgage Loans
3. SALES - Loans to purchase parent company goods.
 Finance the purchase or sales of parent company’s products & services
Finance Companies: form of organization
It shall be organized in the form of a stock corporation in accordance with the provisions of the
Corporation Code of the Philippines, subject to the following requirements:
 a. Equity Ownership - R.A. 8556 states that at least forty percent (40%) of the voting stock
of the corporation shall be owned by citizens of the Philippines. However, this was
changed and R.A. 10881 stated that it may now be owned up to one hundred percent
(100%) by a foreign national.
b. Capital Requirements

1. Fully-owned by 2. More than 40% 3. Financing 4. Financing

Filipinos or up to Foreign-Owned: Companies Companies with
40% Foreign- engaged in off-site locations:
owned: “Digital
Financing”:
i. P10,000,000.00 for P10, 000,000.00, P10, 000, 000.00, P10, 000, 000.00,
financing companies provided that the regardless of the regardless of the
located in Metro same shall in no case location of its Head location of its Head
Manila and Other 1st be lower than US Office, without Office.
Class Cities; $200,000 or its prejudice to the
ii. P5,000,000.00 for Philippine Peso requirements of the
financing companies equivalent, in FIA and its
located in other accordance with the implementing
classes of cities; and provisions of the regulations.
iii. P2, 500,000.00 for Foreign Investments
financing companies Act (FIA) and its
located in implementing
Municipalities. regulations.

c. Other Requirements
 Financing Company shall comply with the constitutional provision on ownership of
land (Article XII, Section 7)
 A majority of the Board of Directors shall be residents of the Philippines (BP 68, Sec.
23)
 The corporate name shall contain the term “financing company”, “finance
company”, “finance and investment company” or any other title or word(s)
descriptive of its operations and activities
 While the companies themselves can be owned by foreign nationals, Republic Act
No. 10881 is still subject to the constitutional proscription that foreigners cannot
own real estate in the Philippines.
Finance Companies: rights & powers
a) Engage in quasi-banking and money market operations with the prior approval of the
Bangko Sentral ng Pilipinas;
b) Engage in trust operations subject to the provisions of the General Banking Act upon
prior approval by the Bangko Sentral ng Pilipinas;
c) Issue bonds and other capital instruments subject to pertinent rules and regulations of
the Bangko Sentral ng Pilipinas;
d) Rediscount their paper with government financial institutions subject to relevant laws,
rules and regulation;
e) Participate in special loan or credit programs sponsored by or made available through
government financial institutions; and
f) Provide foreign currency loans and leases to enterprises who earn foreign currency by
exports or other means, subject to existing laws and rules and regulations promulgated
by the Bangko Sentral ng Pilipinas.
Finance Companies: Periodic Reports
Every financing company shall file with the Commission, the following reports:
 a) Within one hundred twenty (120) days after the end of the fiscal year, four (4) copies of
the audited financial statements (AFS);
b) Within thirty (30) calendar days from the actual stockholders’ meeting, four (4) copies of
the General Information Sheet (GIS);
c) Any change in the membership or composition of the board of directors, officers from
the rank of vice president and up or their equivalent, branch manager, cashier and
administrative officer shall be reported to the Commission within seven (7) working
days thereafter, and the requirements prescribed shall be submitted within thirty (30)
working days from date of the aforesaid change;
d) Within thirty (30) days from the due date of the submission of the AFS, the Special Form
of Financial Statement (FCFS), in the form prescribed by the Commission;
e) Within forty-five (45) day from the end of the semester, Semi-Annual Financial
Statements (FCIF) in the form prescribed by the Commission;
f) And such other reports as the Commission and/or the Bangko Sentral ng Pilipinas may
require.
Finance Companies: Audit Routine & Controls
Special audit considerations arise in the audits of finance companies because of:
 the particular nature of the business risks associated with the transactions undertaken
by finance companies;
 the scale of operations and the resultant significant exposures which can arise within
short periods of time;
 the extensive dependence on computerized systems to process transactions;
 the effect of the regulations in the various jurisdictions in which they operate; and
 The continuing development of new products and finance practices which may not be
matched by the concurrent development of accounting principles and auditing
practices.
LOANS
Auditors should periodically:
 Prove subsidiary records to the general ledger,
 Verify records of loan balances,
 Verify the existence of negotiable collateral,
 Review accrued interest accounts and confirm the computation and disposition of
interest income,
 Verify leases and related balance sheet accounts,
 Test unearned discount accounts, and
 Check rebate amounts for prepaid loans.
BORROWED FUNDS
Auditors should:
 Confirm borrowings were authorized in accordance with internal policies,
 Verify balances of borrowed funds,
 Ensure collateral for borrowings is properly identified and disclosed,
 Verify changes in capital notes outstanding, and
 Review related accrued interest computations and interest expense balances.
BANK PREMISES & EQUIPMENTS
Auditors should:
 Review entries and documentation relative to purchases and sales of premises and
equipment since the previous audit;
 Verify computations of depreciation, amortization, and impairment;
  Check computations of gains or losses on property sold; and
 Trace sale proceeds.
CAPITAL ACCOUNTS & DIVIDENDS
 Auditors should account for all unissued stock certificates, review capital account
changes since the previous audit, check computations for dividends paid or accrued, and
review board minutes to determine the propriety of dividend payments and accruals.
Mortgage Companies
 A loan to purchase a real estate usually with specified payment periods and interest
rates.
 It involves two main parties: the borrower and the lender.
 The loan must be paid back over time. The home purchased acts as collateral on the
money an individual is lent to purchase the home.
TWO TYPES OF MORTGAGES
1. Fixed-Rate Mortgages
2. Adjustable Rate Mortgage or ARM
MORTGAGE COMPANY
 A firm engaged in the business of originating and/or funding mortgages for residential
or commercial property.
 It is often just the originator of a loan.
 Its function is to provide consumers with a wide range products and services designed
to meet the needs of a varied customer base.
ACTIVITIES OF A MORTGAGE COMPANY
 Invest in residential, commercial, and multi-family loans
 Provide services to lenders with regard to assets and credit risk
 May be involved in the management of real estate transactions
TWO TYPES OF MARKET
1. PRIMARY MARKET - The market where mortgage banking entities originate loans to
borrowers.
2. SECONDARY MARKET - The market where originated loans and mortgage-backed
securities (MBS) trade.
NATIONAL HOME MORTGAGE FINANCE CORPORATION
Mission: The NHMFC shall be the government’s major secondary mortgage institution, able to
attract long term funds to provide strong and sustainable housing finance.
Vision: NHMFC shall be the recognized authority and preferred partner of both public and
private institutions in the development and operation of secondary mortgage market. It shall be
the major engine of growth in the housing industry by ensuring sustainable house finance with
high standards of excellence and professionalism.
MAJOR PROGRAM OH NHMFC
 Housing Loans Receivables Purchase Program (HLRPP)
MPF AND FHLB
 The Mortgage Partnership Finance (MPF) Program, which is available through most
Federal Home Loan Banks (FHLBs), provides FHLB member institutions an alternative
method for funding home mortgages for their customers.
 The large majority of financial institutions participating in MPF Program are small banks
or thrifts and credit unions.
  The MPF Program provides multiple offerings and execution options for individual PFIs
to meet the secondary market needs.
MORTGAGE BANKING ENTITIES
 Mortgage banking is generally compatible with a bank’s financing operations, and the
bank is an obvious resource for the mortgage banking entity’s financing requirements.
 Access to the secondary market provides opportunities to restructure existing long-term
loan portfolios.
 Access to secondary mortgage market is an important source of liquidity for banks and
savings institutions.
LOAN ORIGINATION
 Provides consumers with a wide range of mortgage loan products
 Getting Prepared > The Application > Processing > Underwriting > Clearing Conditions >
Closing.
LOAN SERVICING
 It is a function carried out by the bank that issued the loan, a third-party vendor, or a
company that specialized in loan servicing.
 PROVIDE ALL SERVICING TASKS FOR MORTGAGE LOANS
 HANDLE ESCROW ACCOUNTS
 PROPERTY TAX PAYMENTS
 INSURANCE COVERAGE