Summary: | Loans to refinance performing real estate mortgages to a lower interest rate, despite a higher LTV, generally should not be adversely classified provided the credit complies with sound underwriting guidelines. The FDIC is affirming that the standards in the Uniform Retail Credit Classification and Account Management Policy should be followed relative to the classification treatment for high LTV residential refinance loans. The guidance establishes that retail loan classifications should be based on the borrower's payment performance, not the value of the collateral, which can rise and fall as market conditions change. |
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