[Federal Register Volume 70, Number 249 (Thursday, December 29, 2005)]
[Pages 77249-77257]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-24562]



Office of the Comptroller of the Currency

[Docket No. 05-21]


[Docket No. OP-1246]



Office of Thrift Supervision

[No. 2005-56]


Interagency Guidance on Nontraditional Mortgage Products

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, 
Treasury (OTS); and National Credit Union Administration (NCUA).

ACTION: Proposed guidance with request for comment.


SUMMARY: The OCC, Board, FDIC, OTS, and NCUA (the Agencies), request 
comment on this proposed Interagency Guidance on Nontraditional 
Mortgage Products (Guidance). The Agencies expect institutions to 
effectively assess and manage the risks associated with their credit 
activities, including those associated with nontraditional mortgage 
loan products. Institutions should use this guidance in their efforts 
to ensure that their risk management and consumer protection practices 
adequately address these risks.

DATES: Comments must be submitted on or before February 27, 2006.

ADDRESSES: The Agencies will jointly review all of the comments 
submitted. Therefore, interested parties may send comments to any of 
the Agencies and need not send comments (or copies) to all of the 
Agencies. Please consider submitting your comments by e-mail or fax 
since paper mail in the Washington area and at the Agencies is subject 
to delay. Interested parties are invited to submit comments to:
    OCC: You should include ``OCC'' and Docket Number 05-21 in your 
comment. You may submit your comment by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     OCC Web site: http://www.occ.treas.gov. Click on ``Contact 
the OCC,'' scroll down and click on ``Comments on Proposed 
     E-Mail Address: [email protected].
     Fax: (202) 874-4448.
     Mail: Office of the Comptroller of the Currency, 250 E 
Street, SW., Mail Stop 1-5, Washington, DC 20219.
     Hand Delivery/Courier: 250 E Street, SW., Attn: Public 
Information Room, Mail Stop 1-5, Washington, DC 20219.
    Instructions: All submissions received must include the agency name 
(OCC) and docket number for this notice. In general, the OCC will enter 
all comments received into the docket without change, including any 
business or personal information that you provide.
    You may review comments and other related materials by any of the 
following methods:
     Viewing Comments Personally: You may personally inspect 
and photocopy comments at the OCC's Public Information Room, 250 E 
Street, SW., Washington, DC. You can make an appointment to inspect 
comments by calling (202) 874-5043.
     Viewing Comments Electronically: You may request that we 
send you an electronic copy of comments via e-mail or mail you a CD-ROM 
containing electronic copies by contacting the OCC at 
[email protected].
     Docket Information: You may also request available 
background documents and project summaries using the methods described 
    Board: You may submit comments, identified by Docket No. OP-1246, 
by any of the following methods:
     Agency Web site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include the 
docket number in the subject line of the message.
     Fax: 202/452-3819 or 202/452-3102.
     Mail: Jennifer J. Johnson, Secretary, Board of Governors 
of the Federal Reserve System, 20th Street and Constitution Avenue, 
NW., Washington, DC 20551.
    All public comments are available from the Board's Web site at 
www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, 
unless modified for technical reasons.

[[Page 77250]]

Accordingly, your comments will not be edited to remove any identifying 
or contact information. Public comments may also be viewed in 
electronic or paper form in Room MP-500 of the Board's Martin Building 
(20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.
    FDIC: You may submit comments by any of the following methods:
     Agency Web site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow the instructions for submitting comments 
on the Agency Web site.
     E-Mail: [email protected].
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
     Hand Delivery/Courier: Guard station at the rear of the 
550 17th Street Building (located on F Street) on business days between 
7 a.m. and 5 p.m.
    Instructions: All submissions received must include the agency 
name. All comments received will be posted without change to http://www.fdic.gov/regulations/laws/federal/propose.html including any 
personal information provided.
    OTS: You may submit comments, identified by docket number 2005-56, 
by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail address: [email protected]. Please 
include docket number 2005-56 in the subject line of the message and 
include your name and telephone number in the message.
     Fax: (202) 906-6518.
     Mail: Regulation Comments, Chief Counsel's Office, Office 
of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552, 
Attention: No. 2005-56.
     Hand Delivery/Courier: Guard's Desk, East Lobby Entrance, 
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days. Address 
envelope as follows: Attention: Regulation Comments, Chief Counsel's 
Office, Attention: No. 2005-56.
    Instructions: All submissions received must include the agency name 
and docket number for this proposed Guidance. All comments received 
will be posted without change to the OTS Internet site at http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1, including any 
personal information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1. In addition, you may inspect comments 
at the OTS's Public Reading Room, 1700 G Street, NW., by appointment. 
To make an appointment for access, call (202) 906-5922, send an e-mail 
to public.info@ots.treas.gov">public.info@ots.treas.gov, or send a facsimile transmission to (202) 
906-7755. (Prior notice identifying the materials you will be 
requesting will assist us in serving you.) We schedule appointments on 
business days between 10 a.m. and 4 p.m. In most cases, appointments 
will be available the next business day following the date we receive a 
    NCUA: You may submit comments by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html. Follow the 
instructions for submitting comments.
     E-mail: Address to [email protected]. Include ``[Your 
name] Comments on Interagency Guidance on Nontraditional Mortgages'' in 
the e-mail subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for e-mail.
     Mail: Address to Mary Rupp, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, 
Virginia 22314-3428.
     Hand Delivery/Courier: Same as mail address.

Examiner/Credit Risk Specialist, Credit Risk Policy, (202) 874-5170; or 
Michael S. Bylsma, Director, or Stephen Van Meter, Assistant Director, 
Community and Consumer Law Division, (202) 874-5750.
    Board: Brian Valenti, Supervisory Financial Analyst, (202) 452-
3575; or Virginia Gibbs, Senior Supervisory Financial Analyst, (202) 
452-2521; or Sabeth I. Siddique, Assistant Director, (202) 452-3861, 
Division of Banking Supervision and Regulation; Minh-Duc T. Le, Senior 
Attorney, Division of Consumer and Community Affairs, (202) 452-3667; 
or Andrew Miller, Counsel, Legal Division, (202) 452-3428. For users of 
Telecommunications Device for the Deaf (``TDD'') only, contact (202) 
    FDIC: James Leitner, Senior Examination Specialist, (202) 898-6790, 
or April Breslaw, Chief, Compliance Section, (202) 898-6609, Division 
of Supervision and Consumer Protection; or Ruth R. Amberg, Senior 
Counsel, (202) 898-3736, or Richard Foley, Counsel, (202) 898-3784, 
Legal Division.
    OTS: William Magrini, Senior Project Manager, (202) 906-5744; or 
Maurice McClung, Program Manager, Market Conduct, Consumer Protection 
and Specialized Programs, (202) 906-6182; and Richard Bennett, Counsel, 
Banking and Finance, (202) 906-7409.
    NCUA: Cory Phariss, Program Officer, Examination and Insurance, 
(703) 518-6618.


I. Background

    In recent years, consumer demand and secondary market appetite have 
grown rapidly for mortgage products that allow borrowers to defer 
payment of principal and, sometimes, interest. These products, often 
referred to as nontraditional mortgage loans, including ``interest-
only'' mortgages and ``payment option'' adjustable-rate mortgages have 
been available in similar forms for many years. Nontraditional mortgage 
loans offer payment flexibility and are an effective and beneficial 
financial management tool for some borrowers. These products allow 
borrowers to exchange lower payments during an initial period for 
higher payments during a later amortization period as compared to the 
level payment structure found in traditional fixed-rate mortgage loans. 
In addition, institutions are increasingly combining these loans with 
other practices, such as making simultaneous second-lien mortgages and 
allowing reduced documentation in evaluating the applicant's 
creditworthiness. While innovations in mortgage lending can benefit 
some consumers, these layering practices can present unique risks that 
institutions must appropriately measure, monitor and control.
    The Agencies recognize that many of the risks associated with 
nontraditional mortgage loans exist in other adjustable-rate mortgage 
products, but our concern is elevated with nontraditional products due 
to the lack of principal amortization and potential accumulation of 
negative amortization. The Agencies are also concerned that these 
products and practices are being offered to a wider spectrum of 
borrowers, including some who may not otherwise qualify for traditional 
fixed-rate or other adjustable-rate mortgage loans, and who may not 
fully understand the associated risks.
    Regulatory experience with nontraditional mortgage lending programs 
has shown that prudent management of these programs requires increased 
attention in product

[[Page 77251]]

development, underwriting, compliance, and risk management functions. 
As with all activities, the Agencies expect institutions to effectively 
assess and manage the risks associated with nontraditional mortgage 
loan products. The Agencies have developed this proposed Guidance to 
clarify how institutions can offer these products in a safe and sound 
manner, and in a way that clearly discloses the potential risks that 
borrowers may assume. The Agencies will carefully scrutinize 
institutions' lending programs, including policies and procedures, and 
risk management processes in this area, recognizing that a number of 
different, but prudent practices may exist. Remedial action will be 
requested from institutions that do not adequately measure, monitor, 
and control risk exposures in loan portfolios. Further, the agencies 
will seek to consistently implement the guidance.

II. Principal Elements of the Guidance

    Prudent lending practices include the maintenance of sound loan 
terms and underwriting standards. Institutions should assess current 
loan terms and underwriting guidelines and implement any necessary 
changes to ensure prudent practices. In connection with underwriting 
standards, the proposed Guidance addresses:
     Appropriate borrower repayment analysis, including 
consideration of comprehensive debt service in the qualification 
     The potential for collateral-dependent loans, which could 
arise when a borrower is overly reliant on the sale or refinancing of 
the property when loan amortization begins;
     Mitigating factors that support the underwriting decision 
in circumstances involving a combination of nontraditional mortgage 
loans and reduced documentation;
     Below market introductory interest rates;
     Lending to subprime borrowers; and
     Loans secured by non owner-occupied properties.
    The proposed Guidance also describes appropriate portfolio and risk 
management practices for institutions that offer nontraditional 
mortgage products. These practices include the development of policies 
and internal controls that address, among other matters, product 
attributes, portfolio and concentration limits, third-party 
originations, and secondary market activities. In connection with risk 
management practices, the Guidance also proposes that institutions 
     Maintain performance measures and management reporting 
systems that provide warning of potential or increasing risks;
     Maintain an allowance for loan and lease losses (ALLL) at 
a level appropriate for portfolio credit quality and conditions 
affecting collectibility;
     Maintain capital levels that reflect nontraditional 
mortgage portfolio characteristics and the effect of stressed economic 
conditions on collectibility; and
     Apply sound practices in valuing the mortgage servicing 
rights of nontraditional mortgages.
    Finally, the proposed Guidance describes consumer protection 
concerns that may be raised by nontraditional mortgage loan products, 
particularly that borrowers may not fully understand the terms of these 
products. Nontraditional mortgage loan products are more complex than 
traditional fixed-rate products and adjustable rate products and 
present greater risks of payment shock and negative amortization. 
Institutions should ensure that consumers are provided clear and 
balanced information about the relative benefits and risks of these 
products, at a time that will help consumers' decision-making 
processes. The proposed Guidance discusses applicable laws and 
regulations and then describes recommended practices for communications 
with and the provision of information to consumers. These recommended 
practices address promotional materials and product descriptions, 
information on monthly payment statements, and the avoidance of 
practices that obscure significant risks to the consumer or raise 
similar concerns. The proposed Guidance also describes control systems 
that should be used to ensure that actual practices are consistent with 
policies and procedures.
    When finalized, the Guidance would apply to all banks and their 
subsidiaries, bank holding companies and their nonbank subsidiaries, 
savings associations and their subsidiaries, savings and loan holding 
companies and their subsidiaries, and credit unions.

III. Request for Comment

    Comment is requested on all aspects of the proposed Guidance. 
Interested commenters are also asked to address specifically the 
proposed Guidance on comprehensive debt service qualification 
standards, which provides that the analysis of borrowers' repayment 
capacity should include an evaluation of their ability to repay the 
debt by final maturity at the fully indexed rate, assuming a fully 
amortizing repayment schedule. For products with the potential for 
negative amortization, the repayment analysis should include the 
initial loan amount plus any balance increase that may accrue through 
the negative amortization provision. In this regard, comment is 
specifically requested on the following:
    (1) Should lenders analyze each borrower's capacity to repay the 
loan under comprehensive debt service qualification standards that 
assume the borrower makes only minimum payments? What are current 
underwriting practices and how would they change if such prescriptive 
guidance is adopted?
    (2) What specific circumstances would support the use of the 
reduced documentation feature commonly referred to as ``stated income'' 
as being appropriate in underwriting nontraditional mortgage loans? 
What other forms of reduced documentation would be appropriate in 
underwriting nontraditional mortgage loans and under what 
circumstances? Please include specific comment on whether and under 
what circumstances ``stated income'' and other forms of reduced 
documentation would be appropriate for subprime borrowers.
    (3) Should the Guidance address the consideration of future income 
in the qualification standards for nontraditional mortgage loans with 
deferred principal and, sometimes, interest payments? If so, how could 
this be done on a consistent basis? Also, if future events such as 
income growth are considered, should other potential events also be 
considered, such as increases in interest rates for adjustable rate 
mortgage products?
    The text of the proposed Interagency Guidance on Nontraditional 
Mortgage Products follows:

Interagency Guidance on Nontraditional Mortgage Products

    Residential mortgage lending has traditionally been a 
conservatively managed business with low delinquencies and losses and 
reasonably stable underwriting standards. In the past few years, there 
has been a growing consumer demand, particularly in high priced real 
estate markets, for residential mortgage loan products that allow 
borrowers to defer repayment of principal and, sometimes, interest. 
These mortgage products, often referred to as nontraditional mortgage 
loans, include ``interest-only'' mortgages where a borrower pays no 
loan principal for the first few years of the loan and ``payment 
option'' adjustable-rate mortgages (ARMs) where a borrower has

[[Page 77252]]

flexible payment options with the potential for negative 
amortization.\1\ More recently, nontraditional mortgage loan products 
are being offered to a wider spectrum of borrowers who may not 
otherwise qualify for more traditional mortgage loans and may not fully 
understand the associated risks.

    \1\ Interest-only and payment option ARMs are variations of 
conventional ARMs, hybrid ARMs, and fixed rate products. Refer to 
the Appendix for additional information on interest-only and payment 
option ARM loans.

    Many of these nontraditional mortgage loans are also being 
underwritten with less stringent or no income and asset verification 
requirements (``reduced documentation'') and are increasingly combined 
with simultaneous second-lien loans.\2\ These risk-layering practices, 
combined with the broader marketing of nontraditional mortgage loans, 
expose financial institutions to increased risk relative to traditional 
mortgage loans.

    \2\ Refer to the Appendix for additional information on reduced 
documentation and simultaneous second-lien loans.

    Given the potential for heightened risk levels, management should 
carefully consider and appropriately mitigate exposures created by 
these loans. To manage the risks associated with nontraditional 
mortgage loans, management should:
     Ensure that loan terms and underwriting standards are 
consistent with prudent lending practices, including consideration of a 
borrower's repayment capacity;
     Recognize that many nontraditional mortgage loans, 
particularly when combined with risk-layering features, are untested in 
a stressed environment and, therefore, warrant strong risk management 
standards, capital levels commensurate with the risk, and an allowance 
for loan and lease losses that reflects the collectibility of the 
portfolio; and
     Ensure that consumers have information to clearly 
understand loan terms and associated risks prior to making a product 
    As with all activities, the Office of the Comptroller of the 
Currency (OCC), the Board of Governors of the Federal Reserve System 
(Board), the Federal Deposit Insurance Corporation (FDIC), the Office 
of Thrift Supervision (OTS) and the National Credit Union 
Administration (NCUA) (collectively, the Agencies) expect institutions 
to effectively assess and manage the increased risks associated with 
nontraditional mortgage loan products.\3\

    \3\ Refer to Interagency Guidelines Establishing Standards for 
Safety and Soundness. For each Agency, those respective guidelines 
are addressed in: 12 CFR Part 30 Appendix A (OCC); 12 CFR Part 208 
Appendix D-1 (Board); 12 CFR Part 364 Appendix A (FDIC); 12 CFR Part 
570 Appendix A (OTS); and 12 U.S.C. 1786 (NCUA).

    Institutions should use this guidance in their efforts to ensure 
that their risk management practices adequately address these risks. 
The Agencies will carefully scrutinize institutions' risk management 
processes, policies, and procedures in this area. Remedial action will 
be requested from institutions that do not adequately manage these 
risks. Further, the Agencies will seek to consistently implement this 

Loan Terms and Underwriting Standards

    When an institution offers nontraditional mortgage loan products, 
underwriting standards should address the effect of a substantial 
payment increase on the borrower's capacity to repay when loan 
amortization begins. Moreover, the institution's underwriting standards 
should comply with the agencies' real estate lending standards and 
appraisal regulations and associated guidelines.\4\

    \4\ Refer to 12 CFR Part 34--Real Estate Lending and Appraisals, 
OCC Bulletin 2005-3--Standards for National Banks' Residential 
Mortgage Lending, AL 2003-7--Guidelines for Real Estate Lending 
Policies and AL 2003-9--Independent Appraisal and Evaluation 
Functions (OCC); 12 CFR 208.51 subpart E and Appendix C and 12 CFR 
Part 225 subpart G (Board); 12 CFR Part 365 and Appendix A, and 12 
CFR Part 323 (FDIC); 12 CFR 560.101 and Appendix and 12 CFR Part 564 
(OTS). Also, refer to the 1999 Interagency Guidance on the 
``Treatment of High LTV Residential Real Estate Loans'' and the 1994 
``Interagency Appraisal and Evaluation Guidelines.'' Federally 
Insured Credit Unions should refer to 12 CFR Part 722--Appraisals 
and NCUA 03-CU-17--Appraisal and Evaluation Functions for Real 
Estate Related Transactions (NCUA).

    Central to prudent lending is the internal discipline to maintain 
sound loan terms and underwriting standards despite competitive 
pressures. Institutions are strongly cautioned against ceding 
underwriting standards to third parties that have different business 
objectives, risk tolerances, and core competencies. Loan terms should 
be based on a disciplined analysis of potential exposures and 
compensating factors to ensure risk levels remain manageable.
    Qualification Standards--Nontraditional mortgage loans can result 
in significantly higher payment requirements when the loan begins to 
fully amortize. This increase in monthly mortgage payments, commonly 
referred to as payment shock, is of particular concern for payment 
option ARMs where the borrower makes minimum payments that may result 
in negative amortization. Some institutions manage the potential for 
excessive negative amortization and payment shock by structuring the 
initial terms to limit the spread between the introductory interest 
rate and the fully indexed rate. Nevertheless, an institution's 
qualifying standards should recognize the potential impact of payment 
shock, and that nontraditional mortgage loans often are inappropriate 
for borrowers with high loan-to-value (LTV) ratios, high debt-to-income 
(DTI) ratios, and low credit scores.
    For all nontraditional mortgage loan products, the analysis of 
borrowers' repayment capacity should include an evaluation of their 
ability to repay the debt by final maturity at the fully indexed 
rate,\5\ assuming a fully amortizing repayment schedule. In addition, 
for products that permit negative amortization, the repayment analysis 
should include the initial loan amount plus any balance increase that 
may accrue from the negative amortization provision. The amount of the 
balance increase should be tied to the initial terms of the loan and 
estimated assuming the borrower makes only minimum payments during the 
deferral period. Institutions should also consider the potential risks 
that a borrower may face in refinancing the loan at the time it begins 
to fully amortize, such as prepayment penalties. These more fully 
comprehensive debt service calculations should be considered when 
establishing the institution's qualifying criteria.

    \5\ The fully indexed rate equals the index rate prevailing at 
origination plus the margin that will apply after the expiration of 
an introductory interest rate. The index rate is a published 
interest rate to which the interest rate on an ARM is tied. Some 
commonly used indices include the 1-Year Constant Maturity Treasury 
Rate (CMT), the 6-Month London Interbank Offered Rate (LIBOR), the 
11th District Cost of Funds (COFI), and the Moving Treasury Average 
(MTA), a 12-month moving average of the monthly average yields of 
U.S. Treasury securities adjusted to a constant maturity of one 
year. The margin is the number of percentage points a lender adds to 
the index value to calculate the ARM interest rate at each 
adjustment period. In different interest rate scenarios, the fully 
indexed rate for an ARM loan based on a lagging index (e.g., MTA 
rate) may be significantly different from the rate on a comparable 
30-year fixed-rate product. In these cases, a credible market rate 
should be used to qualify the borrower and determine repayment 

    Furthermore, the analysis of repayment capacity should avoid over-
reliance on credit scores as a substitute for income verification in 
the underwriting process. As the level of credit risk increases, either 
from loan features or borrower characteristics, the importance of 
actual verification of the borrower's income, assets, and outstanding 
liabilities also increases.

[[Page 77253]]

    Collateral-Dependent Loans--Institutions should avoid the use of 
loan terms and underwriting practices that may result in the borrower 
having to rely on the sale or refinancing of the property once 
amortization begins. Loans to borrowers who do not demonstrate the 
capacity to repay, as structured, from sources other than the 
collateral pledged are generally considered unsafe and unsound. 
Institutions determined to be originating collateral-dependent mortgage 
loans, may be subject to criticism, corrective action, and higher 
capital requirements.
    Risk Layering--Nontraditional mortgage loans combined with risk-
layering features, such as reduced documentation and/or a simultaneous 
second-lien loan, pose increased risk. When risks are layered, an 
institution should compensate for this increased risk with mitigating 
factors that support the underwriting decision and the borrower's 
repayment capacity. Mitigating factors might include higher credit 
scores, lower LTV and DTI ratios, credit enhancements, and mortgage 
insurance. While higher pricing may seem to address the increased risks 
associated with risk-layering features, it raises the importance of 
prudent qualification standards discussed above. Further, institutions 
should fully consider the effect of these risk-layering features on 
estimated credit losses when establishing their allowance for loan and 
lease losses (ALLL).
    Reduced Documentation--Institutions are increasingly relying on 
reduced documentation, particularly unverified income to qualify 
borrowers for nontraditional mortgage loans. Because these practices 
essentially substitute assumptions and alternate information for the 
waived data in analyzing a borrower's repayment capacity and general 
creditworthiness, they should be used with caution. An institution 
should consider whether its verification practices are adequate. As the 
level of credit risk increases, the Agencies expect that an institution 
will apply more comprehensive verification and documentation procedures 
to verify a borrower's income and debt reduction capacity.
    Use of reduced documentation in the underwriting process should be 
governed by clear policy guidelines. Reduced documentation, such as 
stated income, should be accepted only if there are other mitigating 
factors such as lower LTV and other more conservative underwriting 
    Simultaneous Second-Lien Loans--Simultaneous second-lien loans 
result in reduced owner equity and higher credit risk. Historically, as 
combined loan-to-value ratios rise, defaults rise as well. A delinquent 
borrower with minimal or no equity in a property may have little 
incentive to work with the lender to bring the loan current to avoid 
foreclosure. In addition, second-lien home equity lines of credit 
(HELOCs) typically increase borrower exposure to increasing interest 
rates and monthly payment burdens. Loans with minimal owner equity 
should generally not have a payment structure that allows for delayed 
or negative amortization.
    Introductory Interest Rates--Many institutions offer introductory 
interest rates that are set well below the fully indexed rate as a 
marketing tool for payment option ARM products. In developing 
nontraditional mortgage products, an institution should consider the 
spread between the introductory rate and the fully indexed rate. Since 
initial monthly mortgage payments are based on these low introductory 
rates, there is a greater potential for a borrower to experience 
negative amortization, increased payment shock, and earlier recasting 
of the borrower's monthly payments than originally scheduled. In 
setting introductory rates, institutions should consider ways to 
minimize the probability of disruptive early recastings and 
extraordinary payment shock.
    Lending to Subprime Borrowers--Mortgage programs that target 
subprime borrowers through tailored marketing, underwriting standards, 
and risk selection should follow the applicable interagency guidance on 
subprime lending.\6\ Among other things, the subprime guidance 
discusses the circumstances under which subprime lending can become 
predatory or abusive. Additionally, an institution's practice of risk 
layering for loans to subprime borrowers may significantly increase the 
risk to both the institution and the borrower. Institutions should pay 
particular attention to these circumstances, as they design 
nontraditional mortgage loan products for subprime borrowers.

    \6\ Interagency Guidance on Subprime Lending, March 1, 1999, and 
Expanded Guidance for Subprime Lending Programs, January 31, 2001. 
Federally Insured Credit Unions should refer to 04-CU-12 `` 
Specialized Lending Activities (NCUA).

    Non Owner-Occupied Investor Loans--Borrowers financing non owner-
occupied investment properties should be qualified on their ability to 
service the debt over the life of the loan. Loan terms should also 
reflect an appropriate combined LTV ratio that considers the potential 
for negative amortization and maintains sufficient borrower equity over 
the life of the loan. Further, nontraditional mortgages to finance non 
owner-occupied investor properties should require evidence that the 
borrower has sufficient cash reserves to service the loan in the near 
term in the event that the property becomes vacant.\7\

    \7\ Federally Insured Credit Unions must comply with 12 CFR Part 
723 for loans meeting the definition of member business loans.

Portfolio and Risk Management Practices

    Institutions should recognize that nontraditional mortgage loans 
are untested in a stressed environment and, accordingly, should receive 
higher levels of monitoring and loss mitigation. Moreover, institutions 
should ensure that portfolio and risk management practices keep pace 
with the growth and changing risk profile of their nontraditional 
mortgage loan portfolios. Active portfolio management is especially 
important for institutions that project or have already experienced 
significant growth or concentrations of nontraditional products. 
Institutions that originate or invest in nontraditional mortgage loans 
should adopt more robust risk management practices and manage these 
exposures in a thoughtful, systematic manner by:
     Developing written policies that specify acceptable 
product attributes, production and portfolio limits, sales and 
securitization practices, and risk management expectations;
     Designing enhanced performance measures and management 
reporting that provide early warning for increasing risk;
     Establishing appropriate ALLL levels that consider the 
credit quality of the portfolio and conditions that affect 
collectibility; and
     Maintaining capital at levels that reflect portfolio 
characteristics and the effect of stressed economic conditions on 
collectibility. Institutions should hold capital commensurate with the 
risk characteristics of their nontraditional mortgage loan portfolios.
    Policies--An institution's policies for nontraditional mortgage 
lending activity should set forth acceptable levels of risk through its 
operating practices, accounting procedures, and policy exception 
tolerances. Policies should reflect appropriate limits on risk layering 
and should include risk management tools for risk mitigation purposes. 
Further, an institution should set growth and volume limits by loan 
type, with special attention for products and product combinations in 
need of heightened attention due to easing terms or rapid growth.
    Concentrations--Concentration limits should be set for loan types, 

[[Page 77254]]

originations, geographic area, and property occupancy status, to 
maintain portfolio diversification. Concentration limits should also be 
set on key portfolio characteristics such as loans with high combined 
LTV and DTI ratios, loans with the potential for negative amortization, 
loans to borrowers with credit scores below established thresholds, and 
nontraditional mortgage loans with layered risks. The combination of 
nontraditional mortgage loans with risk-layering features should be 
regularly analyzed to determine if excessive concentrations or risks 
exist. Institutions with excessive concentrations or deficient risk 
management practices will be subject to elevated supervisory attention 
and potential examiner criticism to ensure timely remedial action. 
Further, institutions should consider the effect of employee incentive 
programs that may result in higher concentrations of nontraditional 
mortgage loans.
    Controls--An institution's quality control, compliance, and audit 
procedures should specifically target those mortgage lending activities 
exhibiting higher risk. For nontraditional mortgage loan products, an 
institution should have appropriate controls to monitor compliance and 
exceptions to underwriting standards. The institution's quality control 
function should regularly review a sample of reduced documentation 
loans from all origination channels and a representative sample of 
underwriters to confirm that policies are being followed. When control 
systems or operating practices are found deficient, business line 
managers should be held accountable for correcting deficiencies in a 
timely manner.
    Since many nontraditional mortgage loans permit a borrower to defer 
principal and, in some cases, interest payments for extended periods, 
institutions should have strong controls over accruals, customer 
service and collections. Policy exceptions made by servicing and 
collections personnel should be carefully monitored to confirm that 
practices such as re-aging, payment deferrals, and loan modifications 
are not inadvertently increasing risk. Since payment option ARMs 
require higher levels of customer support than other mortgage loans, 
customer service and collections personnel should receive product-
specific training on the features and potential customer issues.
    Third-Party Originations--Institutions often use third-party 
channels, such as mortgage brokers or correspondents, to originate 
nontraditional mortgage loans. When doing so, an institution should 
have strong approval and control systems to ensure the quality of 
third-party originations and compliance with all applicable laws and 
regulations, with particular emphasis on marketing and borrower 
disclosure practices. Controls over third parties should be designed to 
ensure that loans made through these channels reflect the standards and 
practices used by an institution in its direct lending activities.
    Monitoring procedures should track the quality of loans by both 
origination source and key borrower characteristics in order to 
identify problems, such as early payment defaults, incomplete 
documentation, and fraud. A strong monitoring process should enable 
management to determine whether third-party originators are producing 
quality loans. If appraisal, loan documentation, or credit problems are 
discovered, the institution should take immediate action, which could 
include terminating its relationship with the third-party.\8\

    \8\ Refer to OCC Bulletin 2001-47--Third-Party Relationships and 
AL 2000-9--Third-Party Risk (OCC). Federally Insured Credit Unions 
should refer to 01-CU-20 (NCUA), Due Diligence Over Third-Party 
Service Providers.

    Secondary Market Activity--The sophistication of an institution's 
secondary market risk management practices should be commensurate with 
the nature and volume of activity. Institutions with significant 
secondary market reliance should have comprehensive, formal approaches 
to risk management.\9\ This should include consideration of the risks 
to the institution should demand in the secondary markets dissipate.

    \9\ Refer to ``Interagency Questions and Answers on Capital 
Treatment of Recourse, Direct Credit Substitutes, and Residual 
Interests in Asset Securitizations,'' May 23, 2002; OCC Bulletin 
2002-22 (OCC); SR letter 02-16 (Board); Financial Institution Letter 
(FIL-54-2002) (FDIC); and CEO Letter 163 (OTS). See OCC's 
Comptroller Handbook for Asset Securitization, November 1997. The 
Board also addressed risk management and capital adequacy of 
exposures arising from secondary market credit activities in SR 
letter 97-21. Federally Insured Credit Unions should refer to 12 CFR 
Part 702 (NCUA).

    While sale of loans to third parties can transfer a portion of the 
portfolio's credit risk, an institution continues to be exposed to 
reputation risk that arises when the credit losses on sold loans or 
securitization transactions exceed expected losses. In order to protect 
its reputation in the market, an institution may determine that it is 
necessary to repurchase defaulted mortgages. It should be noted that 
the repurchase of mortgage loans beyond the selling institution's 
contractual obligations is, in the Agencies' view, implicit recourse. 
Under the Agencies' risk-based capital standards, repurchasing mortgage 
loans from a sold portfolio or from a securitization in this manner 
would require that risk-based capital be maintained against the entire 
portfolio or securitization.\10\ Further, loans sold to third parties 
typically carry representations and warranties from the institution 
that these loans were underwritten properly and all legal requirements 
were satisfied. Therefore, institutions involved in securitization 
transactions should consider the potential origination-related risks 
arising from nontraditional mortgage loans, including the adequacy of 
disclosures to investors.

    \10\ Federally Insured Credit Unions should refer to 12 CFR Part 
702 for their risk based net worth requirements.

    Management Information and Reporting--An institution should have 
the reporting capability to detect changes in the risk profile of its 
nontraditional mortgage loan portfolio. Reporting systems should allow 
management to isolate key loan products, risk-layering loan features, 
and borrower characteristics to allow early identification of 
performance deterioration. At a minimum, information should be 
available by loan type (e.g., interest-only mortgage loans and payment 
option ARMs); the combination of these loans with risk-layering 
features (e.g., payment option ARM with stated income and interest-only 
mortgage loans with simultaneous second-lien mortgages); underwriting 
characteristics (e.g., LTV, DTI, and credit score); and borrower 
performance (e.g., payment patterns, delinquencies, interest accruals, 
and negative amortization).
    Portfolio volume and performance results should be tracked against 
expectations, internal lending standards, and policy limits. Volume and 
performance expectations should be established at the subportfolio and 
aggregate portfolio levels. Variance analyses should be performed 
regularly to identify exceptions to policies and prescribed thresholds. 
Qualitative analysis should be undertaken when actual performance 
deviates from established policies and thresholds. Variance analysis is 
critical to the monitoring of the portfolio's risk characteristics and 
should be an integral part of an institution's forecasting process to 
establish and adjust risk tolerance levels.
    Stress Testing--Institutions should perform sensitivity analysis on 
key portfolio segments to identify and quantify events that may 
increase risks in a segment or the entire portfolio. This

[[Page 77255]]

should generally include stress tests on key performance drivers such 
as interest rates, employment levels, economic growth, housing value 
fluctuations, and other factors beyond the institution's immediate 
control. Stress tests typically assume rapid deterioration in one or 
more factors and attempt to estimate the potential influence on default 
rates and loss severity. Through stress testing, an institution should 
be able to identify, monitor and manage risk, as well as develop 
appropriate and cost-effective loss mitigation strategies. The stress 
testing results should provide direct feedback in determining 
underwriting standards, product terms, portfolio concentration limits, 
and capital levels.
    Capital and Allowance for Loan and Lease Losses--Institutions 
should establish appropriate allowances for the estimated credit losses 
in their nontraditional mortgage loan portfolios and hold capital 
commensurate with the risk characteristics of these portfolios. 
Moreover, institutions should recognize that the limited performance 
history of these products, particularly in a stressed environment, 
increases performance uncertainty. As loan terms evolve and 
underwriting practices ease, this lack of seasoning may warrant higher 
capital levels.
    In establishing an appropriate ALLL and considering the adequacy of 
capital, institutions should segment their nontraditional mortgage loan 
portfolios into pools with similar credit risk characteristics. The 
basic segments typically include collateral and loan characteristics, 
geographic concentrations, and borrower qualifying attributes. Credit 
risk segments should also distinguish among loans with differing 
payment and portfolio characteristics, such as borrowers who habitually 
make only minimum payments, mortgages with existing balances above 
original balances due to negative amortization, and mortgages subject 
to sizable payment shock. The objective is to identify key credit 
quality indicators that affect collectibility for ALLL measurement 
purposes and important risk characteristics that influence expected 
performance so that migration into or out of key segments provides 
meaningful information about future loss exposure for purposes of 
determining the level of capital to be maintained.
    Further, those institutions with material mortgage banking 
activities and mortgage servicing assets should apply sound practices 
in valuing the mortgage servicing rights of nontraditional mortgages in 
accordance with interagency guidance.\11\ This guidance requires 
institutions to follow generally accepted accounting principles and 
conservatively treat assumptions used in valuing mortgage-servicing 

    \11\ Refer to the ``Interagency Advisory on Mortgage Banking,'' 
February 25, 2003, issued by the bank and thrift regulatory 
agencies. Federally Insured Credit Unions with assets of $10 million 
or more are reminded they must report and value nontraditional 
mortgages and related mortgage servicing rights, if any, consistent 
with generally accepted accounting principles in the Call Reports 
they file with the NCUA Board.

Consumer Protection Issues

    While nontraditional mortgage loans provide flexibility for 
consumers, the Agencies are concerned that consumers may enter into 
these transactions without fully understanding the product terms. 
Nontraditional mortgage products have been advertised and promoted 
based on their near-term monthly payment affordability, and consumers 
have been encouraged to select nontraditional mortgage products based 
on the lower monthly payments that such products permit compared with 
traditional types of mortgages. In addition to apprising consumers of 
the benefits of nontraditional mortgage products, institutions should 
ensure that they also appropriately alert consumers to the risks of 
these products, including the likelihood of increased future payment 
obligations. Institutions should also ensure that consumers have 
information that is timely and sufficient for making a sound product 
selection decision.\12\

    \12\ Institutions also should review the recommendations 
relating to mortgage lending practices set forth in other sections 
of this guidance and any other supervisory guidance from their 
respective primary regulators, including the discussion in the 
Subprime Lending Guidance referenced in footnote 6 about abusive 
lending practices.

    Concerns and Objectives--More than traditional ARMs, mortgage 
products such as payment option ARMs and interest-only mortgages can 
carry a significant risk of payment shock and negative amortization 
that may not be fully understood by consumers. For example, consumer 
payment obligations may increase substantially at the end of an 
interest-only period or upon the ``recast'' of a payment option ARM. 
The magnitude of these payment increases may be affected by factors 
such as the expiration of promotional interest rates, increases in the 
interest rate index, and negative amortization. Negative amortization 
also results in lower levels of home equity as compared to a 
traditional amortizing mortgage product. As a result, it may be more 
difficult for consumers to refinance these loans. In addition, in the 
event of a refinancing or a sale of the property, negative amortization 
may result in the reduction or elimination of home equity, even when 
the property has appreciated. The concern that consumers may not fully 
understand these products would be exacerbated by marketing and 
promotional practices that emphasize potential benefits without also 
effectively providing complete information about material risks.
    In light of these considerations, institutions should ensure that 
communications with consumers, including advertisements, oral 
statements, promotional materials, and monthly statements, are 
consistent with product terms and payment structures. These 
communications should also provide clear and balanced information about 
the relative benefits and risks of these products, including the risk 
of payment shock and the risk of negative amortization. Clear, 
balanced, and timely communication to consumers of the risks of these 
products is important to ensuring that consumers have appropriate 
information at crucial decision-making points, such as when they are 
shopping for loans or deciding which monthly payment amount to make. 
Such communication should help minimize potential consumer confusion 
and complaints, foster good customer relations, and reduce legal and 
other risks to the institution.
    Legal Risks--Institutions that offer nontraditional mortgage 
products must ensure that they do so in a manner that complies with all 
applicable laws and regulations. With respect to the disclosures and 
other information provided to consumers, applicable laws and 
regulations include the following:
     Truth in Lending Act (TILA) and its implementing 
regulation, Regulation Z.
     Section 5 of the Federal Trade Commission Act (FTC Act).
    TILA and Regulation Z contain rules governing disclosures that 
institutions must provide for closed-end mortgages in advertisements, 
with an application,\13\ before loan consummation, and when interest 
rates change. Section 5 of the FTC Act prohibits unfair or deceptive 
acts or practices.\14\

    \13\ These program disclosures apply to ARM products and must be 
provided at the time an application is provided or before the 
consumer pays a nonrefundable fee, whichever is earlier.
    \14\ The OCC, the Board, and the FDIC enforce this provision 
under the FTC Act and section 8 of the FDI Act. Each of these 
agencies has also issued supervisory guidance to the institutions 
under their respective jurisdictions concerning unfair or deceptive 
acts or practices. See OCC Advisory Letter 2002-3--Guidance on 
Unfair or Deceptive Acts or Practices, March 22, 2002; Joint Board 
and FDIC Guidance on Unfair or Deceptive Acts or Practices by State-
Chartered Banks, March 11, 2004. Federally insured credit unions are 
prohibited from using any advertising or promotional material that 
is inaccurate, misleading, or deceptive in any way concerning its 
products, services, or financial condition. 12 CFR 740.2. The OTS 
also has a regulation that prohibits savings associations from using 
advertisements or other representations that are inaccurate or 
misrepresent the services or contracts offered. 12 CFR 563.27. This 
regulation supplements its authority under the FTC Act.


[[Page 77256]]

    Institutions should also ensure that they comply with fair lending 
laws and the Real Estate Settlement Procedures Act (RESPA). Other 
federal laws also apply to these loan products. Moreover, the Agencies 
note that the sale or securitization of a loan may not affect an 
institution's potential liability for violations of TILA, RESPA, the 
FTC Act, or other laws in connection with its origination of the loan. 
State laws, including laws regarding unfair or deceptive acts or 
practices, also may be applicable. It is important that institutions 
have their communications and other acts and practices reviewed by 
counsel for compliance with all applicable laws. Institutions also 
should monitor applicable laws and regulations for revisions to ensure 
that communications continue to be fully compliant.

Recommended Practices

    Recommended practices for addressing the risks raised by 
nontraditional mortgage products include the following:
    Communications with Consumers--As with all communications with 
consumers, institutions should present important information in a clear 
manner and format such that consumers will notice it, can understand it 
to be material, and will be able to use it in their decision-making 
processes.\15\ Furthermore, when promoting or describing nontraditional 
mortgage products, institutions should provide consumers with 
information that will enable them to make informed decisions and to use 
these products responsibly. Meeting this objective requires appropriate 
attention to the timing, content, and clarity of information presented 
to consumers. Thus, institutions should provide consumers with 
information at a time that will help consumers make product selection 
and payment decisions. For example, institutions should offer full and 
fair product descriptions when a consumer is shopping for a mortgage, 
not just upon the submission of an application or at consummation.

    \15\ In this regard, institutions should strive to: (1) Focus on 
information important to consumer decision making; (2) highlight key 
information so that it will be noticed; (3) employ a user-friendly 
and readily navigable format for presenting the information; and (4) 
use plain language, with concrete and realistic examples. 
Comparative tables and information describing key features of 
available loan products, including reduced documentation programs, 
also may be useful for consumers considering these nontraditional 
mortgage products and other loan features described in this 

     Promotional materials and descriptions of these products 
should provide information that enables consumers to prudently consider 
the costs, terms, features, and risks of these mortgages in their 
product selection decisions, including information about:

--Payment Shock. Institutions should apprise consumers of potential 
increases in their payment obligations (e.g., in both dollar and 
percentage terms), including situations in which interest rates or 
negative amortization reach a contractual limit. For example, product 
descriptions could specifically state the maximum monthly payment a 
consumer would be required to pay under a hypothetical loan example 
once amortizing payments are required and the interest rate and 
negative amortization caps have been reached.\16\ Information provided 
to consumers also could clearly describe when structural payment 
changes will occur (e.g., when introductory rates expire, or when 
amortizing payments are required), and what the new payment amount 
would be or how it would be calculated. As applicable, these 
descriptions could indicate that the new payment amount may be required 
sooner, and may be even higher than the amount indicated, due to 
factors such as negative amortization or increases in the interest rate 

    \16\ Consumers also should be apprised of other material changes 
in payment obligations, such as balloon payments.

--Negative Amortization. When negative amortization is possible under 
the terms of the loan, consumers should be apprised of the potential 
consequences of increasing principal balances and decreasing home 
equity. For example, product descriptions should include, with sample 
payment schedules, corresponding examples showing the effect of those 
payments on the consumer's loan balance and home equity.
--Prepayment Penalties. If the institution may impose a penalty in the 
event that the consumer prepays the mortgage, consumers should be 
alerted to this fact, and to the amount of any such penalty.\17\

    \17\ Federal credit unions are prohibited from imposing 
prepayment penalties. 12 CFR 701.21(c)(6).

--Cost of Reduced Documentation Loans. If an institution offers both 
reduced and full documentation loan programs and there is a pricing 
premium attached to the reduced documentation program, consumers should 
be alerted to this fact.

     Monthly statements that are provided to consumers on 
payment option ARMs should provide information that enables consumers 
to make responsible payment choices, including information about the 
consequences of selecting various payment options on the current 
principal balance. Institutions should present each payment option 
available, explain each option, and note the impact of each choice. For 
example, the monthly payment statement should contain an explanation, 
as applicable, next to the minimum payment amount that this payment 
would result in an increase to the consumer's outstanding loan balance 
due to negative amortization. Payment statements also could provide the 
consumer's current loan balance, what portion of the consumer's 
previous payment was allocated to principal and to interest, and, if 
applicable, the amount by which the principal balance increased. 
Institutions should avoid leading payment option ARM borrowers to 
select the minimum payment (for example, through the format or content 
of monthly statements).
     Institutions also should avoid practices that obscure 
significant risks to the consumer. For example, if an institution 
advertises or promotes a nontraditional mortgage by emphasizing the 
comparatively lower initial payments permitted for these loans, the 
institution also should provide clear and comparably prominent 
information alerting the consumer, as relevant, that these payment 
amounts will increase, that a balloon payment may be due, and that the 
loan balance will not decrease and may even increase due to the 
deferral of interest and/or principal payments. Similarly, institutions 
should avoid such practices as promoting payment patterns that are 
structurally unlikely to occur.\18\ Such practices could raise legal 
and other risks for institutions, as described more fully above.

    \18\ For example, marketing materials for payment option ARMs 
may promote low predictable payments until the recast date. At the 
same time, the minimum payments may be so low that negative 
amortization caps would be reached and higher payment obligations 
would be triggered before the scheduled recast, even if interest 
rates remain constant.

     Institutions also should avoid such practices as: 
Unwarranted assurances or

[[Page 77257]]

predictions about the future direction of interest rates (and, 
consequently, the borrower's future obligations); inappropriate 
representations about the ``cash savings'' to be realized from 
nontraditional mortgage products in comparison with amortizing 
mortgages; statements suggesting that initial minimum payments in a 
payment option ARM will cover accrued interest (or principal and 
interest) charges; and misleading claims that interest rates or payment 
obligations for these products are ``fixed.''
    Control Systems--Institutions also should develop and use strong 
control systems to ensure that actual practices are consistent with 
their policies and procedures, for loans that the institution 
originates internally, those that it originates through mortgage 
brokers and other third parties, and those that it purchases. 
Institutions should design control systems to address compliance and 
fair disclosure concerns as well as the safety and soundness 
considerations discussed above. Lending personnel should be trained so 
that they are able to convey information to consumers about product 
terms and risks in a timely, accurate, and balanced manner. Lending 
personnel should be monitored through, for example, call monitoring or 
mystery shopping, to determine whether they are conveying appropriate 
information. Institutions should review consumer complaints to identify 
potential compliance, reputation, and other risks. Attention also 
should be paid to appropriate legal review and to using compensation 
programs that do not improperly encourage originators to direct 
consumers to particular products.
    Appendix: Terms Used in this Document
    Interest-only Mortgage Loan--A nontraditional mortgage on which, 
for a specified number of years (e.g., three or five years), the 
borrower is required to pay only the interest due on the loan during 
which time the rate may fluctuate or may be fixed. After the interest-
only period, the rate may be fixed or fluctuate based on the prescribed 
index and payments include both principal and interest.
    Payment Option ARM--A nontraditional mortgage that allows the 
borrower to choose from a number of different payment options. For 
example, each month, the borrower may choose a minimum payment option 
based on a ``start'' or introductory interest rate, an interest-only 
payment option based on the fully indexed interest rate, or a fully 
amortizing principal and interest payment option based on either a 15-
year or 30-year loan term plus any required escrow payments. The 
minimum payment option can be less than the interest accruing on the 
loan, resulting in negative amortization. The interest-only option 
avoids negative amortization but does not provide for principal 
amortization. After a specified number of years, or if the loan reaches 
a certain negative amortization cap, the required monthly payment 
amount is recast to require payments that will fully amortize the 
outstanding balance over the remaining loan term.
    Reduced Documentation--A loan feature that is commonly referred to 
as ``low doc/no doc,'' ``no income/no asset,'' ``stated income'' or 
``stated assets.'' For mortgage loans with this feature, an institution 
sets reduced or minimal documentation standards to substantiate the 
borrower's income and assets.
    Simultaneous Second-Lien Loan--A lending arrangement where either a 
closed-end second-lien or a home equity line of credit (HELOC) is 
originated simultaneously with the first lien mortgage loan, typically 
in lieu of a higher down payment.
    This concludes the text of the proposed Interagency Guidance on 
Nontraditional Mortgage Products.

    Dated: December 19, 2005.
John C. Dugan,
Comptroller of the Currency.

    By order of the Board of Governors of the Federal Reserve 
System, December 19, 2005.
Jennifer J. Johnson,
Secretary of the Board.

    Dated at Washington, DC, the 19th day of December, 2005.

    By order of the Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.

    Dated: December 19, 2005.

    By the Office of Thrift Supervision.
John M. Reich,

    By the National Credit Union Administration on December 20, 
Rodney E. Hood,
Vice Chairman.
[FR Doc. 05-24562 Filed 12-28-05; 8:45 am]
BILLING CODE 4810-33-P, 6210-01-P, 6714-01-P, 6720-01-P, 7535-01-P