Volume 29 - Number 5
February 3, 2012
Home-Equity Lenders Need to Be Vigilant In Assessing Risk, Making Loss Reserves
Federal banking regulators this week reminded banks and thrifts to pay close attention to how they monitor risks and calculate loss reserves in their home-equity loan business. An interagency supervisory memo sent this week does not change the regulators’ policy on allowance for loan and lease losses for closed-end second mortgages and home-equity lines of credit, but it urges lenders to “monitor all credit quality indicators” relevant to junior liens. Although many observers have raised concerns about the risk of second mortgages, delinquency rates on loans held by banks, thrifts and credit unions have been lower...
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