OTS High-LTV Review Gives Bay View Pause

The Office of Thrift Supervision is reviewing its guidelines to determine whether high-LTV lending poses a safety and soundness risk to federally insured thrifts that originate and portfolio the product.The move by the OTS has prompted Bay View Capital Corp., a San Mateo, Calif.-based thrift, to delay its $150 million acquisition of PSB Lending Corp., Carlsbad, Calif., one of the nation's top originators of high-LTV loans. PSB Lending is itself a division of a thrift, Pacific Southwest Bank, Dallas. "We have some safety and soundness concerns with the high-LTV market," an OTS spokesman told MortgageWire. "We are concerned not only for the institution but also the consumer." The OTS is reviewing its current regulations to determine a course of action. It is not known whether the federal regulator is planning to limit the holding of high-LTV loans. "I, myself, don't know what's going to happen," the OTS spokesman added, "or how long it's going to take to study the issue." Edward Sondker, CEO of Bay View, said he will wait at least 30 days before deciding whether to proceed with the planned acquisition of PSB. Last year, PSB originated and later securitized $415 million in high-LTV product.