Comptroller of the
Currency Visits Pittsburgh
Community Reinvestment Projects
PITTSBURGH
Comptroller of the Currency John C. Dugan highlighted the success of national
bank investments under the Community Reinvestment Act during a visit to Pittsburgh today.
During the trip, the
Comptroller met with the Pittsburgh Community Reinvestment Group and bankers
and toured area reinvestment projects that were funded through the public
welfare investment authority, known as Part 24.
Pittsburgh Community Reinvestment Group members have helped bring
more than $4 billion of investment to Pittsburghs
low-income neighborhoods and in the process, proven that neighborhood
organizations can have lasting and mutually beneficial relationships with
bankers and other community stakeholders, Mr. Dugan said.
These investments have
delivered essential services to community residents by providing affordable
housing, homebuyer education, and home rehabilitation financing.
This fall the Part 24 investment limit was increased from 10 to 15
percent of a banks capital and surplus, which can generate an additional $30
billion in private investments to strengthen Americas communities.
During remarks, the
Comptroller also highlighted federal regulators guidance to address risks
associated with nontraditional mortgages and the increasing trend of marketing
these products to subprime borrowers who are least able to handle payment shock
that occurs with these loans. These
payment deferral products interest-only and payment-option mortgages allow
lower initial payments in exchange for much higher payments later.
With payment-option
products where customers opt to pay less than the periodic interest due, the
unpaid interest is added to the loan amount causing borrowers debt to grow with
each minimum payment.
The guidance makes
clear that a banks underwriting of a nontraditional mortgage must consider the
borrowers ability to pay principal and interest as if the mortgage were a
traditional amortizing loan. That is, a
borrower should not be able to qualify for a nontraditional mortgage with lower
initial monthly payments unless the borrower could also qualify for a
traditional amortizing loan of the same amount with higher monthly payments,
said Mr. Dugan. The guidance also requires
that lenders provide balanced information about the benefits and risks of such
products.
According to the
Comptroller, the guidance is the start of a longer and larger process that
needs to apply similar standards to mortgage lenders not affiliated with banks.
I am very encouraged
by the model nontraditional mortgage lending guidance that was released this
week by the Conference of State Bank Supervisors and the American Association
of Residential Mortgage Regulators, Comptroller Dugan said. This model guidance mirrors the guidance
issued by the Federal banking agencies, and these regulatory organizations are
strongly encouraging their adoption in every state.
The speech is available
at http://www.occ.gov/ftp/release/2006-124a.pdf.
# # #
The
Office of the Comptroller of the Currency was created by Congress to charter
national banks, to oversee a nationwide system of banking institutions, and to
assure that national banks are safe and sound, competitive and profitable, and
capable of serving the banking needs of their customers in the best possible
manner. OCC press releases and other
information are available at http://www.occ.gov. To receive OCC press releases and issuances
by email, subscribe at http://www.occ.gov/listserv.htm.