Fed highlights subprime issues

NEW YORK – The difficulties faced by the subprime mortgage market in the US may seem on the face of it to be a classic credit risk situation, but regulators are already beginning to sniff out operational risk issues as well. For example, Roger Cole, the director of the division of banking supervision and regulation at the Federal Reserve, highlighted a number of op risk issues in his late March testimony to the Committee on Banking, Housing and Urban Affairs of the US Senate. Specifically, Cole pointed out that the Fed has looked at such issues as quality control processes concerning third-party originations and residential lending appraisal practices to ensure appropriate collateral valuation processes, and "new product review processes to ensure that disciplined approaches are being brought to new lending products and programmes".

Other issues raised by the subprime mortgage scandal include alleged predatory lending by some firms; a failure to communicate clearly with customers; a failure to treat customers fairly; application and other types of mortgage fraud that went undetected; and a poor compliance culture at some firms.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Modernising compliance functions with regtech

Regtech addresses the complexities of regulatory requirements, offering innovative tools to modernise compliance functions, streamline processes and enhance efficiency. This article explores its role in compliance and reporting within the banking sector,…

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here