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Subprime Lending Guidance

by Mary Beth Guard

If your bank engages in subprime lending (which typically targets borrowers with weakened credit histories), you will want to review the joint examination guidance for subprime lending issued by the bank regulatory authorities on January 31st.

The new guidance will help you understand supervisory expectations for five major areas:

  • Allowance for loan and lease losses (ALLL) - Analysis and documentation standards for the ALLL.
  • Capital Adequacy - Factors to consider when determining the level of capital necessary to support subprime lending programs.
  • Loan Review and > - Guidelines for the review and >
  • Cure Programs - Documentation requirements for re-aging, renewing, or extending delinquent subprime accounts.
  • Predatory Lending - Identification of potentially abusive lending practices subject to examiner criticism.

Originally appeared in the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com 6/4/01

First published on 06/04/2001

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