Flexibility to provide rehabilitation financing in communities with depressed home values offered in August guidance for national banks and federal savings associations is making “real differences in communities that need reinvestment most,” the acting comptroller of the currency told a Washington audience last week.
In remarks Nov. 2 to the annual conference of the National Association of Affordable Home Lenders (NAAHL), Acting Comptroller Keith A. Noreika said he is “pleased with the response from a number of banks that have contacted us for more information, and staff members look forward to assisting other banks interested in establishing these sorts of programs.”
Under the guidance for certain higher-loan-to-value mortgage loans (known as higher-LTV loans), banks can establish lending programs to originate home mortgages with greater than 100% of the home’s value.
The guidance applies to mortgages in areas officially targeted for revitalization by government agencies that do not exceed $200,000, which support the purchase or purchase and rehabilitation of owner-occupied residential properties, and do not exceed 10% of the bank’s tier 1 capital in aggregate.
“While programs established under the new OCC guidance are helpful, the agency will consider other bank efforts to support revitalization that fall outside the scope of this guidance,” Noreika said. “These efforts will be considered on a case-by-case basis and must be consistent with safe and sound lending practices, promote fair access to credit and fair treatment of borrowers, and comply with all applicable laws.”
He said that one Midwestern bank discussed such plans with the OCC and has “already established a program that is making loans to its community.”