Banks are required to adopt written real estate lending policies that are consistent with safe and sound banking practices and appropriate to the size of the Bank and the nature and scope of its operations. The policies must be reviewed at least annually. The Bank must:
•Establish loan portfolio diversification standards.
•Establish prudent underwriting standards, including loan-to-loan value limits, that are clear and measurable.
•Establish loan administration procedures for the real estate portfolio.
•Establish documentation, approval, and reporting requirements to monitor compliance with the Bank’s real estate lending policy.
Each Bank must monitor conditions in the real estate market in its lending area to ensure that its real estate lending policy continues to be appropriate for current market conditions. The real estate lending policies adopted by the Bank should reflect consideration of the Interagency Guidelines for Real Estate Lending Policies established by the federal bank and thrift supervisory agencies located in Regulation H, 12 C.F.R. 208, Appendix C.