[Code of Federal Regulations]

[Title 12, Volume 6]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR614.4150]



[Page 112]

 

                       TITLE 12--BANKS AND BANKING

 

                 CHAPTER VI--FARM CREDIT ADMINISTRATION

 

PART 614_LOAN POLICIES AND OPERATIONS--Table of Contents

 

       Subpart D_General Loan Policies for Banks and Associations

 

Sec. 614.4150  Lending policies and loan underwriting standards.





    Under the policies of its board, each institution shall adopt 

written standards for prudent lending and shall issue written policies, 

operating procedures, and control mechanisms that reflect prudent credit 

practices and comply with all applicable laws and regulations. Written 

policies and procedures shall, at a minimum, prescribe:

    (a) The minimum supporting credit and financial information, 

frequency for collection of information, and verification of information 

required in relation to loan size, complexity and risk exposure

    (b) The procedures to be followed in credit analysis

    (c) The minimum standards for loan disbursement, servicing and 

collections

    (d) Requirements for collateral and methods for its administration

    (e) Loan approval delegations and requirements for reporting to the 

board

    (f) Loan pricing practices

    (g) Loan underwriting standards that include measurable standards:

    (1) For determining that an applicant has the operational, 

financial, and management resources necessary to repay the debt from 

cashflow

    (2) That are appropriate for each loan program and the institution's 

risk-bearing ability; and

    (3) That consider the nature and type of credit risk, amount of the 

loan, and enterprises being financed

    (h) Requirements that loan terms and conditions are appropriate for 

the loan; and

    (i) Such other requirements as are necessary for the professional 

conduct of a lending organization, including documentation for each loan 

transaction of compliance with the loan underwriting standards or the 

compensating factors or extenuating circumstances that establish 

repayment of the loan notwithstanding the failure to meet any one or 

more loan underwriting standard.



[62 FR 51014, Sept. 30, 1997]