This post is one that I would like to avoid writing, as I am going to admit committing one of the cardinal sins in due diligence/collateral auditing and being a service provider in general. Not only have I committed it, but I have committed it twice in the last month! Hopefully by admitting it here, I can help someone else avoid the same misstep. The issue I am going to be discussing is timely communication of audit findings (or the lack thereof).
Before I go on, let me assure any current or prospective clients that the instances mentioned below are exceptions and not the rule. Throughout my career I have practiced what is preached; however, I am human and sometimes I just mess up. Of course I have reasons for the transgressions discussed; however, those reasons do not excuse the fact that they occurred. I take full responsibility for them and I will not bother to try and justify them by discussing the reasons involved.
As collateral examiners the one thing that we can control is the flow of obtained information and our analysis of that information. As service providers one of the major deliverables we can offer our customers is the timely delivery of pertinent information. On two recent assignments, I’m afraid that I procrastinated in communicating important findings.
The nature of the findings is not important for this discussion. Suffice it to say that they were material enough that the account managers in both instances stated that they would have liked to have received the information sooner then they did. Fortunately neither issue was detrimental to the deal or the lender’s position. Never the less, the lack of timely communication remains a mark on the wrong side of the ledger for me and for ECG Collateral Services.
The lessons learned from these experiences were not new, but they are ones that should be revisited occasionally. They include:
- The earlier an issue is communicated the better! Early discussion of issues found can lead to further understanding of that issue or the treatment of the issue.
- There may be reasons for the treatment of an issue that are unknown to the examiner. Often the only way to become informed is by having a discussion with the parties involved.
- Generally, all issues should be discussed while the examiner is still in the field. This affords the examiner the ability to further investigate an issue if necessary
- Don’t assume that a finding is not material enough to bring up. Any blip on the radar screen is worth discussing. Sometimes audit findings are like threads on a sweater, the more you pull on the thread, the more it becomes undone. As collateral examiners we are responsible for communicating all findings, we are not supposed to be traffic cops that determine which issues to report on and which to ignore.
- Find a way to deliver your message. In today’s world of email, texting and cell phones (I guess we are still waiting for the video phone) there is rarely a physical reason for not relaying a message. If you call a lender and they are not available, leave a voice mail and follow it up with a more detailed email. The important thing is doing everything you can to get the message delivered. Do not simply leave a voice mail asking for a call back, that is not delivering your message.
- Stick to the facts. When discussing findings it is often best to stick to the facts and to not embellish, elaborate or exaggerate the impact. If the findings being discussed are unfavorable, delivering them is never an enjoyable task, but receiving them is probably even less enjoyable. You can make it easier on yourself and the recipient by simply sticking to the facts.
Sometimes its easy to forget the role of a field examiner; that is the “eyes and ears” of the lender. If the examiner does not communicate his findings, the lender is in the dark. We’ve all been in situations where we momentarily lost our concentration and missed part of an important conversation, key scene in a movie, or an important passage in a book. These momentary lapses in receiving information can have a profound impact on our understanding of the topics being communicated. An examiner not communicating findings can have a similar impact on the management of a loan.
In closing, I would encourage all examiners and service providers to communicate often and loud, because when it comes to communication less is not more!
Thanks for your time……
ECG Collateral Services, Inc.