To All Bank Holding Companies, State Member Banks and Others Concerned in the Second Federal Reserve District:
Guidance that promotes sound risk management practices for home equity lines of credit and loans was issued May 16 by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
The agencies have found that in some cases, credit risk management practices for home equity lending have not kept pace with the product's rapid growth and eased underwriting standards.
This guidance outlines the agencies' expectations for sound underwriting standards and effective credit risk management practices for a financial institution's home equity lending activity.
Caroline T. Frawley
William L. Rutledge
Executive Vice President