Financial Update (Third Quarter 2007)

Pilot Project Aims to Improve Subprime Lending Supervision

calculatorTo help monitor subprime mortgage lenders' compliance with consumer protection regulations, three federal agencies and two associations of state regulators will jointly conduct a pilot program that will evaluate and assess the lending practices of some nondepository lenders with large subprime mortgage operations.

Seeking to ensure compliance with protections
Slated to begin in the fourth quarter of this year, the cooperating agencies will evaluate the companies' underwriting standards as well as senior management oversight of the risk management practices used for ensuring compliance with state and federal consumer protection regulations and laws including the Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Real Estate Settlement Procedures Act, the Federal Trade Commission Act, and the Home Ownership and Equity Protection Act.

The agencies involved include the Federal Reserve Board of Governors, the Office of Thrift Supervision, the Federal Trade Commission, and state agencies represented by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.

Press release

Agencies will collaborate on reviews, investigations
Participating agencies will select a sample of entities under their authority for review or investigation and share information among themselves. Based on the findings of the reviews or investigations, the agencies will initiate corrective or enforcement action as warranted.

Through cooperation, program participants intend to find better ways to ensure effective, consistent reviews of these institutions. At the end of the pilot program's reviews, the agencies will study the results and determine whether the project will continue.

July 24, 2007