Capital: Qualifying Mortgage Loan, Interest Rate Risk Component, and Miscellaneous Changes
other · Treasury · Rule · Published 2002-05-10 · Effective 2002-07-01 · 67 FR 31722
Document
Document number
02-11673
Federal Register citation
67 FR 31722
CFR reference
12 CFR 516
Type
Rule
Action
Final rule.
Category
other
Sub-agency
Treasury
Publication date
2002-05-10
Effective date
2002-07-01
Treasury docket
No. 2002-19
Abstract
The Office of Thrift Supervision (OTS) is making miscellaneous changes to its capital regulations. These changes are designed to eliminate unnecessary capital burdens and to align OTS capital regulations more closely to those of the other federal banking agencies. Under the final rule, a one-to four-family residential first mortgage loan will qualify for a 50 percent risk weight if it is underwritten in accordance with the prudent underwriting standards found in the Interagency Guidelines for Real Estate Lending, including standards relating to loan-to-value (LTV) ratios. The final rule also clarifies certain issues regarding the calculation of the LTV ratio. OTS also is eliminating the requirement that a thrift must deduct from total capital that portion of a land loan or a nonresidential construction loan in excess of an 80 percent LTV ratio; eliminating the interest rate risk component of the risk-based capital regulations; modifying the definition of OECD-based country; and making a technical change to conform its treatment of reserves for loan and lease losses to that of the other federal banking agencies.