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Financial Institution Letters

Predatory Lending
FDIC's Supervisory Policy on Predatory Lending
FIL-6-2007
January 22, 2007


Summary: The attached FDIC Supervisory Policy on Predatory Lending describes certain characteristics of predatory lending, and reaffirms that such activities are inconsistent with safe and sound lending and undermine individual, family and community economic well-being. The statement describes the FDIC's supervisory response to predatory lending, including a list of policies and procedures that relate to consumer lending standards. The FDIC expects the institutions it supervises to treat consumers fairly, adhere to all applicable legal requirements, and underwrite loan products appropriately.

Highlights:

  • The availability of credit to consumers with limited or problem credit histories has increased over the past decade. At the same time, competition in the credit markets to lend to both prime and subprime borrowers has resulted in lenders offering a broad variety of credit products. As credit products become more complex and available to a wider array of borrowers, risks associated with predatory or abusive practices increase.
  • The FDIC combats predatory lending by stopping abusive practices through the examination process and supervisory actions; encouraging banks to serve all members and areas of their communities fairly; and providing information and financial education to help consumers make informed choices from the wide array of available financial services.
  • The FDIC will continue to address predatory lending through vigorous safety and soundness and compliance examinations and enforcement, industry outreach and adult financial education programs.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Chief Loan Officer
Chief Compliance Officer

Related Topics:
Unfair and Deceptive Acts and Practices by State- Chartered Banks; Risks Associated with Subprime Lending; Nontraditional Mortgage Products; Fair Lending; Community Reinvestment; Consumer Financial Education

Attachment:
FDIC Supervisory Policy on Predatory Lending

Contact:
Robert Mooney, Acting Deputy Director,
Compliance and Consumer Protection, Division of
Supervision and Consumer Protection, on 202-898-
3911

Printable Format:
FIL-6-2007 - PDF 51k (PDF Help)

Note:
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/news/financial/2007/index.html.

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.

Paper copies of FDIC financial institution letters may be obtained via the FDIC's Public Information Center (1-877-275-3342 or 703-562-2200).




Last Updated 1/22/2007 communications@fdic.gov