The review will be also based on the recommendations made by the Joint Forum in its January 2010 Review of the Differentiated Nature and Scope of Financial Regulation. The Joint Forum focused on two fundamental areas of concern in the residential mortgage market: poor underwriting practices and the lack of consistent supervisory and regulatory regimes for similar activities and products. A questionnaire to collect information from national authorities has been distributed to FSB members, and the responses will be analysed and discussed by the FSB later this year. The review will be completed and published in early 2011.
As part of this review, FSB welcomes feedback from financial institutions, industry associations, consumer groups and other stakeholders on their experiences regarding residential mortgage underwriting practices, either in a particular country or across several countries. This could include comments on:
· gaps in regulatory and supervisory oversight;
· areas where regulations or guidance from different agencies might overlap;
· current or best practices for measuring a borrower’s ability and willingness to repay;
· how market practices have evolved in recent years; and
· challenges faced by underwriters or originators that operate in several countries.
Feedback should be submitted by 25 October 2010 to fsb@bis.org under the subject heading “FSB Thematic Peer Review on Mortgage Underwriting Practices.” Individual submissions will not be made public.
This is the third FSB thematic peer review in 2010. The first was the review of compensation, completed in March 2010, and the second is the review on risk disclosures, which is currently underway.
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