OCC Issues New Residential Lending Examination Procedures
by Anna DeSimone
June 15, 2015, the Office of the Comptroller of the Currency (OCC) issued the Revised Comptroller’s Handbook Booklet and Rescissions. The announcement was issued to chief executive officers of all national banks and federal savings associations, department and division heads, all examining personnel, and other interested parties.
The “Residential Real Estate Lending” booklet of the Comptroller’s Handbook is dated June 2015. Please refer to the introductory section of this newsletter to view the 183-page booklet in its entirety.
This revised booklet replaces the “Real Estate Loans” booklet issued in March 1990 (and examination procedures issued in March 1998). The revised booklet also replaces section 212, “One- to Four-Family Residential Real Estate Lending,” issued in February 2011 as part of the former Office of Thrift Supervision (OTS) Examination Handbook for the examination of federal savings associations (FSA).
The revised booklet incorporates and reflects applicable national bank and federal savings association statutes and regulations, guidance, and examination procedures. The booklet also provides updated guidance to examiners on assessing and managing the risks associated with residential real estate (RRE) lending activities.
This Comptroller’s Handbook booklet is intended to be a summary restatement of existing laws, regulations, and policies. Examiners and members of the public may use this booklet as reference for an overview of this subject. Nothing in this booklet should be interpreted as changing existing OCC policy.
Note for Community Banks
The “Residential Real Estate Lending” booklet applies to examinations of OCC-supervised institutions engaged in RRE lending activities.
Highlights
The revised booklet
• Makes the following applicable to FSAS:
o Advisory Letter 1997-7, “Affordable Mortgage Portfolios” (August 19, 1997)
o OCC Bulletin 2005-3, “OCC Guidelines Establishing Standards for National Banks’ Residential Mortgage Lending Practices: Appendix C to 12 CFR Part 30” (February 2, 2005)
• Rescinds Thrift Bulletin 85.
• Provides updated guidance to examiners on assessing the quantity of risk associated with RRE lending and the quality of RRE lending risk management.
• Includes wholesale changes to the functional areas of production, servicing, and collections and foreclosure to incorporate recent lessons learned and regulatory changes.
• Addresses recent amendments to Regulation X and Regulation Z issued by the Consumer Financial Protection Bureau as well as other statutory and regulatory changes, including those directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Anna DeSimone is President and Founder of Bankers Advisory and Principal of CliftonLarsonAllen LLP. She can be reached at Anna@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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