OCC Bulletin: Supervisory Guidance on Risk Management and Reporting Requirements

The OCC has issued a bulletin providing national banks and federal savings associations (collectively, banks) with guidance on appropriate credit risk management practices for investor-owned, one- to four-family residential real estate (IORR) lending where the primary repayment source for the loan is rental income. The bulletin is intended to promote consistent risk management practices and to summarize the applicable requirements for such lending, noting that repayment sources for IORR loans may be volatile and highly leveraged.

The bulletin addresses, among other topics, the OCC's expectation that banks should have credit risk management policies suitable for the risks specific to IORR lending; that IORR loan policies should establish prudent underwriting standards; and that banks should identify IORR properties and segregate them from other residential loans for risk management purposes.