FIELD OF THE INVENTION

The present invention relates generally to a loan audit system, and more particularly to a system and method for grading of bank loans with chained confidence scoring and an audit document investigation tool with augmentation and automation.

BACKGROUND

Banks and other financial institutions maintain portfolios of loans such as commercial mortgage loans. Given the risks associated with borrowers that become financially distressed, it is important for such financial institutions to be able to audit their loan portfolios to maintain current and accurate information on the level of risk of default. The value attributed to a portfolio of loans is also an important factor in determining whether a lending agency's reserves are correctly set. Known methods for auditing a portfolio of loans typically comprise a process that is largely dependent on the experience and judgment of individual auditors. For example, a bank may send its credit files for a portfolio of loans to an auditor. If there are a large number of loans, the auditor may begin by determining a representative sample of the loans to analyze within the portfolio, e.g., 40-60 of the loans. This step inherently introduces risk because it eliminates some portion of the loans from the analysis.

Next, a subject matter expert (“SME”), such as an experienced commercial mortgage loan auditor, reviews the credit file documents and locates and interprets relevant facts and attributes, such as the loan amount, type of collateral, payment history, primary source of repayment (PSOR), guarantor, appraised value, and third party information. The SME may consider primary and secondary sources for the facts and attributes. Primary sources may include the actual loan documents. Secondary sources may include third party information relevant to the appraised value or the collateral.

The SME will typically analyze dozens of files and hundreds of pages in his or her analysis of a loan. In this process, the SME may disambiguate multiple instances of an attribute across files, such as identifying a single loan type based on differing descriptions of the loan type in the credit file. The SME may also discover evidence of anomalies beyond explicit facts that impact the risk rating. For example, the SME may uncover anomalies in the loan documents that have a bearing on the borrower's risk of default.

Based on his or her experience and guidelines, the SME makes a judgment as to the appropriate loan risk rating. Typically, a formula is not used to perform a calculation, and conclusions are drawn from multiple reviews. It is not uncommon for two different SMEs to adjudicate different loan risk ratings for the same commercial mortgage loan. The SMEs resolve differences through additional human reviews and discussions. The SMEs may also provide an overall confidence value, based on their experience and judgment, which specifies the SME's level of confidence that the loan risk rating is correct. There is no calculation or quantification used to arrive at the overall confidence value; rather, it is chosen by the individual auditor based on his or her judgment and interpretation of various documents in the credit file as well as any applicable internal guidelines.

Although the known processes generally provide an acceptable level of accuracy, there are certain disadvantages, such as the need to reconcile differing conclusions, the reliance on human experience and judgment, the need to rely on only a small sample of loans in the portfolio that are reviewed, and the expense of labor involved in the process. Accordingly, it would be desirable to have an automated system and method to overcome these and other disadvantages.

SUMMARY

According to one embodiment, the invention relates to an Audit Document Investigation Tool that provides augmentation for various stages throughout an audit process. An embodiment of the present invention guides an auditor through the analysis with augmented context and intelligence and also provides flexibility so that the auditor may deviate and investigate as the process leads and the collected information dictates. As a critical component of audit technology initiatives, the Audit Document Investigation Tool provides a consistent and efficient workflow to ingest, automatically prioritize and investigate documents, leverageable by any procedure workflow and linkable to audit platforms for full audit trail and subsequent review.

Exemplary embodiments of the invention can provide a number of advantages to auditors using the system. The Audit Document Investigation Tool is a key initiative in an entity's audit transformation journey, providing benefits across several strategic avenues. Various benefits may be achieved including labor efficiency, revenue retention and augmented quality. In addition, an embodiment of the present invention enables auditors to navigate and find content faster and more reliably. Augmenting the auditor's investigation process facilities fact finding within documents to support and confirm determinations. This leads to increased confidence in generation of summary documents or workpapers. The augmented experience delivers valuable insights as to where and how information is retrieved and extracted. As a result, auditors are better equipped to make more informed and thorough risk determinations.

These and other advantages will be described more fully in the following detailed description.

