OCC Provides Risk Management Guidance for Higher-Loan-to-Value Lending Programs

In their Bulletin 2017-28, the Office of the Comptroller of the Currency (OCC) provides guidance for managing risks both to borrowers and banks that are associated with residential lending programs originated when the loan-to-value ratio (LTV) exceeds 100 percent.

Among other things, the bulletin identifies OCC supervisory considerations and requirements relating to high LTV loan programs and discusses the criteria under which banks may initiate programs to accommodate higher LTV loans.  There is also a notice requirement that the bank must provide to the OCC supervisory office in writing at least 30 days before the initiation or substantive change to a previously submitted program.

Upon receipt of the notice, OCC examiners will review and assess the bank’s program for consistency with safe and sound lending practices outlined in the bulletin.