Supervision and Regulation Letters

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SR 05-11:

Interagency Credit Risk Management Guidance for Home Equity Lending

BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C. 20551

DIVISION OF BANKING
SUPERVISION AND REGULATION

SR 05-11
May 16, 2005
Revised June 2, 2026
Attachment Reposted June 2, 2026

On June 2, 2026: This letter's attachment, Credit Risk Management Guidance for Home Equity Lending, was revised to remove references to reputational risk.

TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK

SUBJECT:

Interagency Credit Risk Management Guidance for Home Equity Lending

The Federal Reserve and the other federal financial institutions regulatory agencies have issued the attached interagency guidance to promote sound risk management practices at financial institutions with home equity lending programs. While delinquency and loss rates for home equity loans and lines have historically been low, the agencies have observed a rapid growth in home equity lending activity, involving products with higher embedded risk. At the same time, the agencies have noted an easing of underwriting standards. This guidance is intended to highlight the sound risk management practices that an institution should follow to keep pace with the growth and risk in its home equity portfolio. Further, this guidance should be considered in the context of existing regulations and guidelines that are listed as cross references at the end of this letter.

Federal Reserve Banks are asked to distribute this letter and the interagency guidance to banking organizations supervised by the Federal Reserve, as well as to their supervisory and examination staff. If you have any questions concerning this guidance, please contact Sabeth Siddique, Manager, Credit Risk Section, at (202) 452-3861 or Virginia Gibbs, Senior Supervisory Financial Analyst, at (202) 452-2521.

signed by
Richard Spillenkothen
Director
Division of Banking
Supervision and Regulation

Attachments:
Cross References:

  • Real Estate lending Standards Regulation and Interagency Guidelines for Real Estate Lending Policies (12 CFR 208.51 and Appendix)

  • SR 99-26, "Interagency Guidance on High Loan-to-Value Residential Real Estate Lending"

  • Regulation Z – Truth in Lending (12 CFR 226)

  • Interagency Guidelines Establishing Standards for Safety and Soundness (12 CFR 208, Appendix D-1)

  • Appraisal Regulations (12 CFR 208 subpart E and 12 CFR 225 subpart G)

  • SR 94-55, "Interagency Appraisal and Evaluation Guidelines"

  • Risk-Based Capital Guidelines (12 CFR 208, Appendix A, III.D.4. and 12 CFR 225, Appendix A, III.D.4.)

  • SR 02-16, "Interagency Questions and Answers on Capital Treatment of Recourse, Direct Credit Substitutes, and Residual Interests in Asset Securitizations"

  • SR 01-4, "Interagency Expanded Guidance for Subprime Lending Programs"

  • SR 00-8, "FFIEC Uniform Retail Credit Classification and Account Management Policy"

  • SR 97-21, "Risk Management and Capital Adequacy of Exposures Arising from Secondary Market Credit Activities"

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Last Update: June 02, 2026