Second State Bank offers a mortgage product that involves simultaneous second lien loans. These include a first lien for up to 90 percent of the purchase price and a second loan for the down payment, secured by a second lien on the property. The bank would like to be in full compliance with the Interagency Guidance on Nontraditional Mortgage Product Risks. Which of the following should Second State Bank incorporate into its loan program?

Question

Quizplus · Accepted Answer

The Interagency Guidance on Nontraditional Mortgage Product Risks requires that lenders have risk management procedures in place to measure the risk associated with nontraditional mortgage products. Second State Bank should incorporate risk management procedures to evaluate the risk of all simultaneous second lien loans and report the results to management. This will ensure that the bank is in compliance with the guidance and is able to manage the risks associated with this mortgage product. Choices B, C, and D are not appropriate or required under the guidance.

Second State Bank Offers a Mortgage Product That Involves Simultaneous