On June 15, the Office of the Comptroller of the Currency (OCC) issued the “Residential Real Estate Lending” booklet of the Comptroller’s Handbook. This revised booklet replaces the “Real Estate Loans” booklet issued in March 1990 (and examination procedures issued in March 1998). The revised booklet also replaces section 212, “One- to Four-Family Residential Real Estate Lending,” issued in February 2011 as part of the former Office of Thrift Supervision (OTS) Examination Handbook for the examination of federal savings associations (FSAs).

The “Residential Real Estate Lending” booklet provides information and examination procedures for residential real estate (RRE) lending activities, in which the majority of the loans are retained by the bank (“held for investment”). The booklet also discusses the different scales and nature of RRE lending activities and the risk management practices deemed appropriate for each level of operations. Expanded residential lending operations may include some mortgage banking operations that warrant reference to, and use of, the procedures in the “Mortgage Banking” booklet. This RRE booklet primarily provides information and examination procedures for first-lien mortgage loans, home equity loans and home equity lines of credit. When appropriate, guidance detailing elevated risk management expectations that has been issued on an interagency basis by the bank regulatory agencies (i.e., the OCC, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System) is incorporated into the booklet.

The revised booklet:

  • makes the following applicable to FSAs:
    • Advisory Letter 1997-7, “Affordable Mortgage Portfolios” (August 19, 1997); and
    • OCC Bulletin 2005-3, “OCC Guidelines Establishing Standards for National Banks’ Residential Mortgage Lending Practices: Appendix C to 12 CFR Part 30” (February 2, 2005).
  • rescinds Thrift Bulletin 85;
  • provides updated guidance to examiners on assessing the quantity of risk associated with RRE lending and the quality of RRE lending risk management;
  • includes wholesale changes to the functional areas of production, servicing, and collections and foreclosure to incorporate recent lessons learned and regulatory changes; and
  • addresses recent amendments to Regulation X and Regulation Z issued by the Consumer Financial Protection Bureau as well as other statutory and regulatory changes, including those directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act.