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Thursday, April 19, 2012

FSB Principles for Sound Residential Mortgage Underwriting Practices

The Financial Stability Board (FSB) has released a report titled Principles for Sound Residential Mortgage Underwriting Practices.

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.
The report also sets out an implementation framework through which jurisdictions can apply minimum residential mortgage underwriting standards, and describes tools that could be used to monitor and supervise these standards.

Read the report.

2 comments:

manndyharris ✉ said...
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Peter Murphy said...
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