The agencies have found that in some cases credit risk management practices for home equity lending have not kept pace with the product's rapid growth and eased underwriting standards.
The attached home equity lending guidance outlines the agencies' expectations for sound underwriting standards and effective credit risk management practices for a financial institution's home equity lending activity.
The guidance describes sound risk management systems for:
Continuation of FIL-45-2005
- Product Development and Marketing
- Origination and Underwriting
- Third-Party Originations
- Collateral Valuation Management
- Account Management
- Portfolio Management
- Operations, Servicing, and Collections
- Secondary Market Activities
- Portfolio Classifications, Allowance for Loan and Lease Losses (ALLL), and Capital
FDIC-Supervised Banks (Commercial and Savings)
Chief Executive Officer
Chief Lending Officer
Part 323 Appraisals
Interagency Appraisal and Evaluation Guidelines
Part 365 Real Estate Lending Standards
Interagency Guidance on High LTV Residential Real Estate Lending
Uniform Retail Credit Classification and Account Management Policy
Credit Risk Management Guidance for Equity Lending
Senior Examination Specialist James Leitner at firstname.lastname@example.org or (202) 898-6790
FIL-45-2005 - PDF 33k (PDF Help)
FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/news/financial/2005/index.html.
To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC FILs may be obtained through the FDIC's Public Information Center, 801 17th Street, NW, Room 100, Washington, DC 20434 (1-877-275-3342 or (703) 562-2200).