Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
5 Cards in this Set
- Front
- Back
|
The requirements of Part 365 (not appendix A)
|
"• Must adopt and maintain written lending policies for real estate
• Real estate lending policies must: o Be consistent with safe and sound banking practices o Appropriate for bank’s size and nature/scope of operations o Be reviewed and approved by Board Annually • Lending policies must establish: o Loan portfolio diversification standards o Prudent underwriting standards, including LTV limits, that are clear and measurable o Loan administration procedures for RE portfolio o Documentation, approval, and reporting requirement to monitor compliance with policies • Must monitor conditions of RE market in lending area |
|
|
"
The supervisory LTV limits for the six different RE loan categories |
"Raw Land 65%
Land Development 75% Comm./Multifamily (includes condos)./Comm. Const. 80% 1-4 Family SFR Const. 85% Improved Property 85% • Owner-occupied 1-4 family and home equity have no set limit • If LTV exceeds 90% at origination – bank should require credit enhancement (mortgage insurance or readily marketable collateral) |
|
|
" The reporting requirements and risk limits related to loans in excess of supervisory LTV limits |
"o Loans in excess of supervisory LTV limits
• may be appropriate if supported by other credit factors • Should be identified and reported in aggregate to the Board quarterly • Individually report exception loans of significant size to Board • *Aggregate amount of loans exceeding LTV limits should not exceed 100% of TRBC • *Sublimit of 30% of TRBC for commercial, ag, multifamily or other non 1-4 family residential properties • a) include all loans secured by same property if any loan exceeds LTV limits • b) Include recourse obligation of any such loan sold with recourse • *No longer have to report loans to Board if falls below supervisory LTV limits |
|
|
"
What types of loans are exempt from supervisory LTV requirements |
"o Exclusions
• Government guaranteed or insured (must cover portion in excess of supervisory limit) • US govt guaranteed or insured • State govt • State, municipal, or local govt (if they have financial capacity and willingness to fulfill guarantee) • Loans promptly sold after origination, without recourse to 3rd party • Loans to sell RE acquired by lender by collecting on debt (selling OREO) • Collateral (RE) is abundance of caution • Lender does not rely on RE as principal security and extension of credit is not used to acquire, develop, or construct permanent improvements on real property • IE working capital loans • Refinance without advancement of new funds or increase to line of credit (except for reasonable closing costs) • Restructured as part of workout (with or without new funds) • Consistent with S&S procedures and part of clear strategy to achieve orderly liquidation, reduce risk of loss or maximize recovery |
|
|
"
violation vs. contravention of 365 |
"If no written lending policy = violation of part 365
If fail to report loan to board that exceeds supervisory limits, etc. - apparent contravention of Appendix A of Part 365 |
