Banks Facing Loan Scrutiny

Federal regulators are seeking more information about nontraditional mortgage loans banks are holding in portfolio, including deferred interest they are treating as income.

In early October, federal banking regulators issued tough underwriting standards on interest-only and payment-option ARMs and now they are following up with call report changes.

Starting with the first quarter 2007 call report, all banks will be required to report their holdings of one-to-four family loans with negative-amortization features.

The regulators also are proposing additional reporting requirement for banks with large exposures.

Banks with as little as $100 million might have to report the total maximum remaining amount of negative amortization contractually permitted on nontraditional mortgage loans and the total amount of negative amortization that is included in the carrying amount of these loans. (c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

Next in News ►