OCC BULLETIN 2014-29
Risk Management of Home Equity Lines of Credit Approaching the End-of-Draw Periods
To: Chief Executive Officers of All National Banks, Federal Savings Associations, Federal Branches and Agencies of Foreign Banks, Department and Division Heads, All Examining Personnel, and Other Interested Parties
Description: Interagency Guidance
As HELOCs approach scheduled maturity or repayment phases, borrowers could face substantial payment shock when they are required to start amortizing principal. Borrowers may be unable to meet new payment terms or refinance existing debt as economic conditions and property values may have changed since origination. As HELOC draw periods approach expiration, the agencies expect lenders to manage risks in a disciplined, prudent manner; to work with troubled borrowers to avoid unnecessary defaults; and to engage in appropriate risk recognition.
The guidance describes
- five core operating principles that should govern management's oversight of HELOCs nearing their EOD period.
- 10 EOD risk management expectations that promote a clear understanding of potential exposures and help guide consistent, effective responses to HELOC borrowers who may be unable to meet contractual obligations.
See original table at: http://www.occ.gov/news-issuances/bulletins/2014/bulletin-2014-29.html
Please contact your supervisory office or direct questions to
Senior Deputy Comptroller and Chief National
- "Interagency Guidance on Home Equity Lines of Credit Nearing Their End-of-Draw Periods" (http://www.occ.gov/news-issuances/bulletins/2014/bulletin-2014-29a.pdf) (PDF)
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