The Office of the Comptroller of the Currency (OCC) provided guidance to spur community revitalization through higher-loan-to-value mortgage lending in targeted areas.
Depressed housing values in certain distressed communities may inhibit mortgage lending and slow recovery in these communities. Banks can support revitalization efforts by offering mortgage products for owner-occupied residential properties in communities targeted by governmental entities for revitalization. The OCC’s bulletin establishes principles for managing risks on certain residential mortgage loans where the loan-to-value ratio at origination exceeds 100 percent.
“Banks and thrifts play a critical role in keeping communities vibrant and helping struggling communities recover,” Acting Comptroller of the Currency Keith Noreika said. “Higher-LTV lending programs in communities targeted for revitalization can promote more healthy communities in a manner consistent with safe and sound lending practices.”
The guidance describes provisions that should be included in bank policies and procedures related to loan portfolio management, underwriting, consumer notices, and other relevant matters. It also offers guidance concerning the OCC’s consideration of programs that fall outside of the scope of this policy that are consistent with safe and sound lending practices, promote fair access to credit and fair treatment of borrowers, and comply with all applicable laws.
Further, the OCC will evaluate annually the extent to which banks’ and federal savings associations’ programs are collectively contributing to community revitalization efforts. The OCC’s evaluation will consider, among other matters, whether the programs adequately control the various risks, the general performance of loans, and the effect such lending has had on the housing market and other economic indicators for communities targeted by the programs.