The report provides a framework for jurisdictions to set minimum acceptable underwriting standards. The principles are meant to strengthen residential mortgage underwriting practices and help supervisors more effectively monitor and detect any erosion of underwriting practices.
The principles span the following areas:
- effective verification of income and other financial information;
- reasonable debt service coverage;
- appropriate loan-to-value ratios;
- effective collateral management; and
- prudent use of mortgage insurance.
Read the report.