January 31, 2012
Summary: The federal financial institution regulatory agencies have jointly issued supervisory guidance on loan loss allowance estimation practices for loans and lines of credit secured by junior liens on 1-4 family residential properties (junior liens). The guidance discusses the responsibilities of institution management and examiners and builds on existing supervisory guidance for home equity lending and the allowance for loan and lease losses (ALLL).
Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies to all FDIC-supervised banks and savings associations, particularly those with significant holdings of junior liens.
Complete Financial Institution Letter: http://www.fdic.gov/news/news/financial/2012/fil12004.html