- Many subprime and other mortgage loans have been transferred into securitization trusts. Servicing for these securitized loans are governed by the terms of the contract documents, typically referred to as Pooling and Servicing Agreements.
- A significant number of adjustable-rate mortgages are scheduled to reset in the coming months. These resets may result in significant payment shock to borrowers, which can increase the likelihood of default.
- Servicers of these loans should review the governing documents for the securitization trusts to determine the full extent of their authority to restructure loans that are delinquent or in default or are in imminent risk of default.
- The governing documents may allow servicers to proactively contact borrowers at risk of default, assess whether default is reasonably foreseeable, and, if so, apply loss mitigation strategies designed to achieve sustainable mortgage obligations.
- Loss mitigation techniques that preserve homeownership are generally less costly than foreclosure, particularly when applied before default.
- When considering and implementing loss mitigation strategies, servicers are expected to treat consumers fairly and to adhere to all applicable legal requirements.
FDIC-Supervised Banks (Commercial and Savings)
Chief Executive Officer
Chief Loan Officer
Chief Compliance Officer
Nontraditional Mortgage Product Risks
Subprime Mortgage Lending
Workout Arrangements for Residential Borrowers
Securitized Subprime Residential Mortgage Loans
Implications of Restructuring Certain Securitized
Residential Mortgage Loans
Loss Mitigation Strategies
Statement on Loss Mitigation Strategies for Servicers of Residential Mortgages
Examination Specialist Beverlea S. Gardner at
BGardner@FDIC.gov or (202) 898-3640 or
Senior Capital Markets Specialist Suzanne L. Clair
at SClair@FDIC.gov or (202) 898-6605
FIL-76-2007 - PDF (PDF Help)
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
To receive FILs electronically, please visit
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).