http://www.fdic.gov/regulations/examinations/supervisory/insights/sisum09/examiners_desk.html18 For example, see FDIC’s Supervisory Policy Statement on Predatory Lending,
http://www.fdic.gov/news/news/financial/2007/fil07006a.html. “Predatory lending involves ... making unaffordable loans based on the assets of the borrower rather than on the borrower’s ability to repay an obligation.” In its comment letter to the Federal Reserve on the 2008 Regulation Z amendments, the FDIC expressed its belief that the Federal Reserve should eliminate the safe harbor and stand firm in requiring lenders to adequately verify borrowers’ income and assets. Specifically, the FDIC wrote, “Verifying a borrower’s income and assets is a fundamental principle of sound mortgage loan underwriting that protects borrowers, neighborhoods, investors, and the financial system as a whole.... Requiring borrowers to document their income will make it far less likely that consumers will receive loans that they cannot afford to pay. Documentation also will provide the markets with greater confidence in the quality of pools of higher-priced (and nontraditional) mortgage loans and their projected income streams. Thus, both consumers and the economy as a whole will benefit.” See
http://www.federalreserve.gov/SECRS/2008/April/20080409/R-1305/R-1305_1075_1.pdf. http://www.fdic.gov/news/news/financial/2007/fil07006a.htmlIf you are FDIC, read these. I attended a seminar where the presenter indicated that the FDIC not only looks at DTI calculations and verification docs, but also if the vorrower would be able to refinance once the loan matured (would they qualify for the refi, be able to afford the closing costs, etc).