Comptroller of the Currency
Administrator of National Banks

The Office of the Comptroller of the Currency (OCC) published in the Federal Register on June 30, 2009, an interim final rule concerning the risk-based capital treatment for one-to-four family residential mortgages modified under the U.S. Treasury Department’s Making Home Affordable Program (program). This bulletin transmits and briefly summarizes that interim final rule.

Summary

The program provides a framework for mortgage lenders and servicers to restructure certain one- to-four family mortgages to make them more affordable. Under the OCC’s general risk-based capital rules, mortgages modified pursuant to the program would be considered “restructured” and thus no longer eligible for a 50 percent risk weight; such mortgages would receive a 100 percent risk weight. The interim final rule changes the risk-based capital rules so that mortgage loans modified under the program will retain the risk weight assigned prior to the modification, so long as the loan continues to meet other prudential criteria. In other words, the risk weight applied to a given mortgage loan prior to modification under the program – whether 50 percent or 100 percent – would be retained for that mortgage loan subsequent to the modification. However, a modified loan that was receiving a 100 percent risk weight because it was 90 days or more past due or on nonaccrual would be eligible to return to the 50 percent risk weight category after demonstration of a sustained period of repayment performance consistent with current OCC practice.

Further Information

You may direct questions or comments to Margot Schwadron, Senior Risk Expert, Capital Policy Division, at (202) 874-6022 or Carl Kaminski, Senior Attorney, Legislative and Regulatory Activities Division, at (202) 874-5090.