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Subject: Home Equity Lending
Date: October 4, 2006
To: Chief Executive Officers and Compliance Officer of All National Banks, Department and Division Heads, and All Examining Personnel
Description: Addendum to OCC Bulletin 2005-22
The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration (the agencies) have jointly issued the attached addendum to the May 2005 Interagency Credit Risk Management Guidance for Home Equity Lending (OCC Bulletin 2005-22).
The addendum provides guidance addressing the timing and content of communications with consumers obtaining open-end home equity lines of credit (HELOCs) that contain an interest-only feature.
On October 4, 2006, the agencies issued the Interagency Guidance on Nontraditional Mortgage Product Risks. See OCC Bulletin 2006-41. That guidance includes guidelines for managing the risks associated with closed-end residential mortgage products that allow borrowers to defer payment of principal or interest, including consumer protection issues. This addendum adds similar guidelines for open-end HELOCs with an interest-only feature that were not included in the 2005 guidance.
For further information, please contact Gregory Nagel, Credit Risk Specialist, Credit and Market Risk, (202) 874-5170; or Kathryn D. Ray, Special Counsel, Community and Consumer Law Division, (202) 874-5750.
Emory W. Rushton