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Supervisory Loan to Value Reporting
by Randy Carey, BOL Guru
Guru Bios
Question: My question is about Supervisory Loan to Value. We do a first and piggy back second mortgage loan on a customer’s primary residence and the LTV is over 90% on the combined first and second. We report this as an exception to our board and sell the first on the secondary market and keep the second in house and continue to report the loan as an exception to SLTV. Is there a time frame in which we can "assume" the principal on the first has been reduced enough to stop reporting it?
Answer: You can cease to report when the combination of the senior lien and the second drops below the SLTV and this cannot be based on any assumed reduction in the senior lien. You would have to have some method of determining that the first has actually been paid down. This is sometimes not the easiest thing to determine. If you are contemplating just waiting a while and pulling a credit report, make sure you consider what permissible purpose you may or may not have for pulling another credit report.
First published on BankersOnline.com 9/18/06
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