Will this borrower repay? Every credit decision is a model output.
3 AI translations · Banking & Financial Services
You evaluate consumer loan applications (mortgage, auto, personal, credit card) using credit bureau data (FICO, VantageScore), DTI ratios, employment verification, collateral valuation (for secured lending), and your institution's credit policy overlays. You apply score cutoffs, policy exceptions, and adverse action requirements per Reg B/ECOA. For mortgage, you layer in Fannie/Freddie guidelines, LTV thresholds, QM/ATR requirements, and TRID disclosures. Your underwriters handle the exceptions that fall outside automated decision parameters.
You analyze commercial loan requests by evaluating financial statements (spreading and analyzing balance sheets, income statements, cash flow), industry risk, management quality, collateral (real estate appraisals, equipment valuations, A/R and inventory for ABL), guarantor strength, and debt service coverage ratios. For CRE, you evaluate property-level cash flows (NOI, cap rates, DSCR), market conditions (vacancy rates, absorption, comparable sales), environmental risk (Phase I/II), and construction risk for development loans. You prepare credit memos, present to loan committee, and manage the annual review cycle for the existing portfolio.
You manage fair lending compliance for every credit decision: HMDA data collection and reporting, Reg B adverse action notices, disparate impact testing, redlining analysis, and fair lending examination readiness (OCC, FDIC, CFPB, state regulators). For AI/ML models used in credit decisions, you manage model risk under the revised interagency guidance of 17 April 2026 — OCC Bulletin 2026-13 and Federal Reserve SR 26-2, which rescinded OCC 2011-12 and SR 11-7 — covering model validation, ongoing monitoring, documentation, and governance. That guidance is principles-based rather than prescriptive, and it expressly places generative and agentic AI outside its scope. The federal posture on AI and fair lending shifted sharply in 2026: the CFPB's Regulation B rule effective 21 July 2026 removed the effects test, and the Bureau closed the supervision and enforcement matters that rested on disparate impact. The statutes themselves are unchanged, and disparate-impact exposure remains live through private litigation, state attorneys general, and state law. Where your exposure sits has moved; whether it exists has not.