Agencies issue advisory on mortgage banking activities. (Announcements).Federal bank and thrift regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. on February 25, 2003, jointly issued an advisory letter discussing risks related to mortgage banking activities. The letter highlights concerns and provides guidance regarding mortgage banking activities, primarily in the valuation, accounting, and hedging of mortgage servicing Mortgage servicing The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default , involved with a mortgage loan. assets. The guidance, issued under the auspices of the Federal Financial Institutions Examination Council The Federal Financial Institutions Examination Council, or FFIEC, is a formal interagency body of the United States government empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of (the Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (or OCC) was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States. , the Federal Reserve Board, the Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. , and the Office of Thrift Supervision The Office of Thrift Supervision (OTS) was established as a bureau of the Treasury Department in August 1989 as part of a major Reorganization Plan of the thrift regulatory structure mandated by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C.A. ), applies to all banks and thrift institutions; however, it is primarily applicable to those institutions that are actively involved in mortgage banking activities. Although the number of institutions with significant exposure to mortgage banking assets is limited, mortgage banking is a significant and growing business line for many institutions. The agencies developed the guidance in response to recent examinations and market developments, especially the record volume of refinancings caused by the decline in interest rates. The guidance details the agencies' expectations regarding risk-management activities including valuation and modeling processes, hedging activities, management information systems, and internal audit. The guidance also notes that the agencies may require additional capital for institutions that fail to consider the sound practices set forth in this advisory in their risk-management programs. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion