Regulatory Alerts2007-08-29
SBD Opinion No. 2007-3 Memorandum for Opinion 2007-3 Statement on Subprime Mortgage Lending
The Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators, and the National Association of Consumer Credit Administrators issued this statement to establish parallel regulatory standards for state-supervised mortgage providers regarding subprime lending. The document mirrors federal interagency guidance by defining subprime borrowers and prohibiting high-risk loan features such as payment shock, limited income documentation, and excessive prepayment penalties. It mandates prudent underwriting practices, including verifying repayment capacity and total debt obligations, while enforcing consumer protection principles that require clear disclosure of loan risks and costs.
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