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DiCom Software Newsletter
April, 2015  
The 2015 Annual Industry Survey is open for participation until April 30th.  All banks are encouraged to participate so they can receive access to the industry statistics related to Loan Review and Credit Risk.  Please click the link below to take the 40 question survey.  You will have instant access to the data to date, and will receive access to the complete results at the end of May.
CQS News
CQS 9.2 
CQS 9.2 is available and ready for client download from DiCom's secure FTP site. The release includes improved comment text box functionality, the ability to use the Report Designer for Monitor and Problem Loan reporting, and several other UI improvements.  If you are a current client and are interested in this release, please contact our technical services team as soon as possible to begin your upgrade. 
CQS 9.5 
CQS 9.5 is currently being developed for release later this year.  User group meetings are taking place to gather input on the functionality in this release.  If you wish to take part in these user group meetings, please contact our Product Manager here

Learn More and 


Welcome to the eleventh edition of DiCom's e-newsletter!  We use this tool to keep you informed of the latest credit risk and loan review industry updates.  This month we consider the current federal lawsuit against Wells Fargo and how this might cause Loan Review and Credit Risk professionals to wonder whether they have lost sight of the reason their work is so critical to the success of their institutions.

As always, your input on topics for future newsletters, as well as suggestions for enhancements to our suite of credit risk management software solutions is heartily encouraged!

Focus on the Why

Bankers are generally good at following the rules.  This is important, since there are a lot of rules, and the penalties for not following the rules can be painful, and expensive, or both.  Following the rules is not enough though.  Just ask Wells Fargo.  Since 2012, Wells has been dealing with a federal lawsuit filed against it related to its handling of the origination and underwriting of FHA loans.  In that suit, the information documented by Wells' own internal quality control reports is being used to support fraud allegations.1


Prosecutors are convinced that Wells' executives obtained information documented by their review processes and failed to act on it appropriately.  Aside from the details of the suit, this assumption by the prosecutors is where Credit Risk professionals should pay attention.  The prosecutors believe that because the review process identified an issue, management was automatically 'educated' on it and able to act on it appropriately.  On the surface, that sounds like a logical conclusion, but it is not hard to imagine a reality existing in many organizations where 'having' information, understanding its significance and acting on it are three totally separate events. 


If information is gathered by bank staff in the normal course of their work, and conclusions are drawn based on that work, just documenting the file is not enough.  Files full of insightful documents are not why the rules exist.  The rules exist in order to compel the bank to act on the information resulting from that effort.  Those rules are intended to direct the bank and its management toward prudent decisions which they can only make as a result of the efforts to produce that educated analysis.

Doing quality analysis of portfolios of loans results in a great deal of valuable information about the health of a portfolio, and in some cases that information will indicate concerns that need to be addressed.  Yes, it is great to be able to 'check the box' and achieve the desired portfolio coverage that the bank has as its target.  It is appropriate to have documents that detail the results of that analysis.  If the information is not communicated effectively and acted on accordingly, only one of the three critical steps has been completed.  The regulators expect more than that.  Actually management expects more than that, even though they would likely roll their eyes if the reports they received on all this work exceeded a page or two each period.  It is imperative then, that when there is a valid concern identified by a review, it gets communicated.  Management needs the information communicated in a meaningful way so it is critical that reports presented be clear and concise.  Let there be no confusion about what the issue is that has been identified, and then the possibility for appropriate action is much improved.  That is 'why' the work was done in the first place.


Until this suit settles, there is no way to know if the executives at Wells acted knowingly to defraud HUD.  Wells had what was reported to be a 'good' quality control system, and they had documented the issues themselves along the way.  Of course no regulator would want the message to be that banks should stop documenting.  Documenting is critical to the regulatory process and important for many other reasons.  Bankers need to think beyond that first step and focus on the greater goal of sustaining a healthy, well-performing institution.  There is no way to do that without having good quality effort and results each step of the way, and documenting is part of the process.  The message should be that the documents themselves are not the goal.  It's making them part of an informed and effective decision making process that counts.



Coming up May 19th and 21st we have a webinar that will address how our CQS software system can help a bank be 'Regulator Ready' and have a smooth and successful exam. Watch your email for the information to register for that webinar.

For clients and non-clients, please also take this opportunity to participate in the fourth annual Loan Review Industry Survey which is currently underway by following the link here.



Catherine L. Sterba
DiCom Software
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