Highlights:
Several federal programs have recently been instituted to promote
financial stability and mitigate the effects of current market conditions on
insured depository institutions. These efforts are designed to improve the
functioning of credit markets and strengthen capital in our financial
system to improve banks' capacity to engage in prudent lending during
these times of economic distress.
The agencies expect all banking organizations to fulfill their fundamental
role in the economy as intermediaries of credit to businesses, consumers,
and other creditworthy borrowers. Lending to creditworthy borrowers
provides sustainable returns for the organization and is constructive for
the economy as a whole.
The agencies urge all lenders and servicers to adopt systematic,
proactive, and streamlined mortgage loan modification protocols and to
review troubled loans using these protocols. Lenders and servicers
should first determine whether a loan modification would enhance the net
present value of the loan before proceeding to foreclosure, and they
should ensure that loans currently in foreclosure have been subject to
such analysis.
In implementing this Statement, the FDIC encourages institutions it
supervises to:
- lend prudently and responsibly to creditworthy borrowers;
- work with borrowers to preserve homeownership and avoid preventable foreclosures;
- adjust dividend policies to preserve capital and lending capacity; and
- employ compensation structures that encourage prudent lending.
State nonmember institutions' adherence to these expectations will be
reflected in examination ratings the FDIC assigns for purposes of
assessing safety and soundness, their compliance with laws and
regulations, and their performance in meeting the requirements of the
Community Reinvestment Act (CRA).
Distribution:
FDIC-Supervised Institutions
Suggested Routing:
Chief Executive Officer
Senior Credit Officer
Attachment:
"Interagency Statement on Meeting the
Needs of Creditworthy Borrowers"
Contact:
Institution's contact person (Case Manager
or Field Supervisor) at applicable FDIC
Regional Office, or Associate Director
Steven D. Fritts in Washington at 202-898-
3723 and sfritts@fdic.gov
Printable Format:
FIL-128-2008 - PDF (PDF Help)
Note:
FDIC financial institution letters (FILs) may
be accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2008/index.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution
letters may be obtained through the
FDIC's Public Information Center, 3501
Fairfax Drive, E-1002, Arlington, VA
22226.
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