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#1389103 - 05/11/10 04:53 PM Short Term Balloon Loans
Heather301, CRCM Offline
100 Club
Joined: Nov 2006
Posts: 105
Has the FDIC responded to the guidance letter submitted by the Federal Reserve on November 9, 2009 which outlines their interpretation of the ability of banks to offer short term balloon notes less than 7 years? We are trying to determine what will happen if we decide to offer balloons less than 7 years. Under Reg Z, banks are given safe harbor, if they comply with the provisions therein. If we choose to use the letter issued by the Federal Reserve to substantiate our reasoning for offering 5 year balloons - what will be our risk exposure when examiners from the FDIC review our policies?

Any assistance with this would be appreciated.
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Live simply, Love generously, Care deeply, Speak kindly, Leave the rest to God.....

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Lending Compliance
#1389135 - 05/11/10 05:21 PM Re: Short Term Balloon Loans Heather301, CRCM
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,844
Bloomington, IN
Quote:
what will be our risk exposure when examiners from the FDIC review our policies?


The person to best answer that question is your EIC. I would suggest calling them and discussing with them how they are going to interpret the letter.

This was some what discussed a couple of days ago and as Andy and I alluded the FRB owns Reg Z and they are the ones that interpret it. It would be unlikely the FDIC would not follow the FRB's guidance.

But again you should be discussing this with your regional FDIC EIC.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1389143 - 05/11/10 05:39 PM Re: Short Term Balloon Loans Dan Persfull
Heather301, CRCM Offline
100 Club
Joined: Nov 2006
Posts: 105
Thank you! I will contact our EIC to see if we can get something in writing. I appreciate your guidance and as always it is greatly appreciated!
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Live simply, Love generously, Care deeply, Speak kindly, Leave the rest to God.....

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