Interagency Statement on Meeting the Needs of Creditworthy Borrowers
FIL-128-2008 November 12, 2008
The FDIC joined the other federal banking agencies in issuing the attached "Interagency Statement on Meeting the Needs of Creditworthy Borrowers" on November 12, 2008.
Several federal programs have recently been instituted to promote
financial stability and mitigate the effects of current market conditions on
insured depository institutions. These efforts are designed to improve the
functioning of credit markets and strengthen capital in our financial
system to improve banks' capacity to engage in prudent lending during
these times of economic distress.
The agencies expect all banking organizations to fulfill their fundamental
role in the economy as intermediaries of credit to businesses, consumers,
and other creditworthy borrowers. Lending to creditworthy borrowers
provides sustainable returns for the organization and is constructive for
the economy as a whole.
The agencies urge all lenders and servicers to adopt systematic,
proactive, and streamlined mortgage loan modification protocols and to
review troubled loans using these protocols. Lenders and servicers
should first determine whether a loan modification would enhance the net
present value of the loan before proceeding to foreclosure, and they
should ensure that loans currently in foreclosure have been subject to
In implementing this Statement, the FDIC encourages institutions it
lend prudently and responsibly to creditworthy borrowers;
work with borrowers to preserve homeownership and avoid preventable foreclosures;
adjust dividend policies to preserve capital and lending capacity; and
employ compensation structures that encourage prudent lending.
State nonmember institutions' adherence to these expectations will be
reflected in examination ratings the FDIC assigns for purposes of
assessing safety and soundness, their compliance with laws and
regulations, and their performance in meeting the requirements of the
Community Reinvestment Act (CRA).