OCC 2001-6
OCC Bulletin
Subject:  Subprime Lending
Description: Expanded Guidance for Subprime Lending
Programs
Date: January 31, 2001

TO:	Chief Executive Officers of National Banks,
Department and Division Heads, and All Examining
Personnel

The Office of the Comptroller of the Currency (OCC),
the Federal Deposit Insurance Corporation, the Federal
Reserve Board, and the Office of Thrift Supervision
have jointly issued the attached "Expanded Guidance for
Subprime Lending Programs."  The issuance supplements
the "Interagency Guidance on Subprime Lending" issued
March 1, 1999.  Examiners should use these interagency
issuances in conjunction with OCC Bulletin 1999-15,
Subprime Lending, Risks and Rewards, when reviewing
subprime activities.

The expanded guidance applies specifically to
institutions with subprime lending programs that are
greater than or equal to 25 percent of tier 1
regulatory capital.  While the OCC believes that
responsible subprime lending can expand credit access
for consumers and offer attractive returns for bankers,
during recent years institutions engaged in subprime
programs have represented a disproportionate number
of problem institutions and bank failures.  As a
result, institutions with significant subprime lending
activities will be subject to closer examination
scrutiny to ensure that their programs have appropriate
risk management controls and capital support.

Primary issues discussed in the guidance include:

* Analysis and documentation standards for the
allowance for loan and lease losses and regulatory
capital maintenance.
* Examination review and classification standards for
individual loans and portfolios.
* Documentation requirements for re-aging, renewing, or
extending delinquent subprime accounts.
* Examination review of potentially abusive lending
practices.

This guidance is effective immediately.  For banks with
subprime programs greater than or equal to 25 percent
of tier 1 regulatory capital, examiners should evaluate
subprime lending activities during their next on-site
review for compliance with this guidance.

For further information, please contact Daniel Pearson,
national bank examiner, Credit Risk Division,
(202) 874-5170.


					
Emory W. Rushton
Senior Deputy Comptroller
Bank Supervision Policy