Agency Reviewing Predatory Mortgage Loans

The Office of Thrift Supervision became the first federal banking regulator to formally address rising concern about potentially predatory lending in the home loan market, beginning a full-scale review of its mortgage lending regulations. The Treasury Department’s OTS is seeking public and industry input on how widespread abusive mortgage lending practices may be, which institutions might be involved and whether its own regulations may be inadvertently fueling the problem. Among the approaches the agency raises is modifying its regulations relating to the Parity Act, putting restrictions on high-cost mortgage loans originated by thrifts and requiring thrifts to review secondary market purchases to make sure they are not investing in abusive loans. The agency said it will take comments until July 5 and in the meantime will continue to work with other U.S. banking regulators on a possible joint policy statement or other action on predatory lending. The initiative is part of a broader campaign to encourage a greater rate of savings among Americans.

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