Risk Management Guidance for Higher-Loan-to-Value Lending Programs in Communities Targeted for Revitalization
The OCC issued Bulletin 2017-28 regarding circumstances under which banks may establish a program to originate certain higher-LTV loans, and OCC’s supervisory considerations regarding such programs. These programs may be eligible for Community Reinvestment Act credit.
The guidance provides information about the required policies and procedures under such a program and about the process and timing for notifying the OCC about starting or modifying a program. “Bank lending under such a program may serve the credit needs of individual borrowers and the community, and the bank may receive Community Reinvestment Act consideration depending on the specifics of the program.”
Such programs would apply to purchase loans or purchase plus rehabilitation of owner-occupied properties in communities “officially targeted” for revitalization by federal, state, municipal or other government-designated entities. Eligible loans would be permanent first-lien mortgages with LTV ratios exceeding 100 percent, without mortgage insurance or other acceptable collateral and with an original loan balance of $200,000 or less.