Summary: | When estimating credit losses on each group of loans with similar risk characteristics, an institution should consider its historical loss experience on the group, adjusted for changes in trends, conditions, and other relevant factors in the current economic environment that affect repayment of the loans in the group as of the allowance evaluation date. The need to consider all significant factors that affect collectibility is especially important for loans secured by junior liens on 1-4 family residential properties (junior lien loans) in areas where there have been declines in the value of such properties. See the attached "Allowances for Loan and Lease Losses in the Current Economic Environment: Loans Secured by Junior Liens on 1-4 Family Residential Properties." |
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