Seal of the Board of Governors of the Federal Reserve System
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM

WASHINGTON, D. C.  20551

DIVISION OF BANKING
SUPERVISION AND REGULATION

SR 99-26 (SUP)
October 12, 1999

TO THE OFFICER IN CHARGE OF SUPERVISION AND APPROPRIATE
          SUPERVISORY AND EXAMINATION STAFF AT EACH FEDERAL
          RESERVE BANK AND TO STATE MEMBER BANKS WITHIN THE DISTRICT


SUBJECT: Interagency Guidance on High Loan-To-Value Residential Real Estate Lending

                     The Federal Reserve, along with the other federal banking agencies, recently issued additional guidance on high loan-to-value (LTV) residential real estate loans.  The press release and interagency statement, which are attached, clarify the agencies' real estate lending guidelines, adopted in 1992, with respect to residential real estate loans.1

                     The Federal Reserve previously issued guidance on home equity lending and high LTV residential loans in May 1995.  This new interagency statement builds on that earlier guidance and provides further discussion of the risks that high LTV loans may pose to banks.  The interagency statement also provides clarification of two of the exemptions from the standards, including (i) the "abundance of caution" exemption and (ii) the exemption regarding loans sold promptly without recourse.  This SR letter supercedes SR letter 95-31.

                     Reserve Banks are asked to distributed the attached statement and press release to state member banks in their districts.  Questions pertaining to this interagency statement should be directed to Norah Barger, Assistant Director, at (202) 452-2402 or Virginia Gibbs, Senior Supervisory Financial Analyst, at (202) 452-2521.


Richard Spillenkothen
Director


Attachments


Cross Reference:  SR 93-1, SR 93-11, and SR 93-33

Superseded:  SR 95-31



Notes:

1.   Refer to SR 93-1, SR 93-11, and SR 93-33.  Return to text


SR letters | 1999