OCC Warns Bankers about High LTV Loans

Acting Comptroller of the Currency Julie Williams is warning bankers about eroding underwriting standards on home equity loans and high LTV loans."While competition is steadily driving down prices, the risks of home equity lending are increasing," the comptroller warned. Consumers are struggling with heavy debt loads, she said, and consumer loans may not be a safe haven in the next economic downturn. "Given the high costs of foreclosure and remarketing, that portion of any loan -- first or second -- that exceeds 85% to 90% of the home's appraised value is tantamount to unsecured credit at secured prices -- a bargain no sensible banker should accept," Ms. Williams told an American Bankers Association conference in Orlando, Fla., this morning.