FDIC Requests Comments on Proposed "Examination Guidance for Third-Party Lending"

The FDIC requested comments on its proposed "Examination Guidance for Third-Party Lending." The guidance is intended to establish compliance measures that FDIC-supervised institutions should follow when relying on a third party to perform a significant aspect of the lending process, such as marketing, originating, servicing or underwriting.

The guidance highlights three examples of third-party lending to which it specifically relates: (i) banks originating loans for third parties (including instances in which the bank holds the loan for a short period of time before selling to a third party), (ii) banks originating loans through third parties or jointly with third parties (for instance, if the bank relies on a third party to generate loan volume), and (iii) institutions originating loans using platforms developed by third parties.

The proposed guidance:

• outlines the risks unique to third-party lending arrangements and acknowledges that the institution's board of directors and senior management are ultimately responsible for managing third-party lending activities;

• suggests that institutions should establish a third-party lending risk management program and compliance management system to address risk assessment, due diligence and oversight; and

• describes increased supervisory attention for institutions that engage in significant lending activities through third parties, including a 12-month examination cycle, concurrent risk management and consumer protection examinations, offsite monitoring and possible review of third parties.

Comments on the proposed guidance must be submitted by September 12, 2016.