Regulatory Alerts2007-11-01
Added · Updated
Final: 2108/2209 Statement on Subprime Mortgage Lending
The State Bank Commissioner adopts new Regulations 2108/2209, 2302, and 3402, with an effective date of November 11, 2007. Regulation 2108/2209 establishes a Statement on Subprime Mortgage Lending that mirrors an interagency statement to address risks associated with adjustable-rate mortgage products, defining subprime borrowers by credit characteristics such as delinquencies, high debt-to-income ratios, or low credit scores. The regulation requires providers to implement prudent underwriting standards, including verifying income and assessing repayment capacity at fully indexed rates, while prohibiting predatory lending practices like loan flipping and requiring clear consumer disclosures regarding payment shock and prepayment penalties. Regulation 2302 grants exemptions from certain statutory requirements to banks, trust companies, credit unions, and other financial institutions authorized to do business in Delaware.