Commissioner Thomas E. Hampton of the District of Columbia Department of Insurance, Securities and Banking (DISB) today announced that the agency will be adopting a Statement of Guidance on SubPrime Mortgage Lending (SubPrime Statement) that covers the marketing and underwriting of subprime mortgages by District-licensed mortgage lenders and brokers. 

“We hope that these guidelines will level the playing field in the mortgage market to protect consumers from taking on subprime loans and high-risk mortgages without having a full understanding of the terms of such loans,” Commissioner Hampton said.

This statement has been developed in cooperation with the Conference of State Bank Supervisors (CSBS), the American Association of Residential Mortgage Regulators (AARMR), and the National Association of Consumer Credit Administrators (NACCA), and applies to state-licensed mortgage lenders and brokers doing business in the District of Columbia. The guidance will be used to promote consistent regulation in the mortgage market and to address emerging risks associated with certain subprime lending practices.  

The CSBS, AARMR and NACCA guidance parallels final guidance released June 29, 2007, by the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the National Credit Union Administration.

As with the Non-traditional Mortgage Product guidance released by DISB on Dec. 5, 2006, the purpose of this guidance is to ensure consumers will see equal protection, and that all originators of residential mortgages will be subject to similar supervisory guidance. This guidance is for all District-licensed mortgage lenders and brokers. 

The regulatory guidance may be found at DISB’s website, or the CSBS website at http://www.csbs.org.  If you need more information regarding this regulatory guidance, please contact Financial Institution Examination Officer Edna Boateng at edna.boateng@dc.gov.