Important Notices

January 12, 2007

Special Report - Non-traditional mortgage survey

TO THE PRESIDENTS OF STATE-CHARTERED BANKS AND CREDIT UNIONS:

Dear Sir or Madam:

Recent trends in noncurrent loans suggest that non-traditional mortgage loans pose higher risks than do traditional amortizing mortgage loans. In addition, non-traditional mortgage lending activity has drawn increased scrutiny from a wide range of sources, with concerns being expressed regarding the possibility that some borrowers are being exposed to undue levels of risk given their financial and repayment capacity, possibly without their full understanding of the terms and features of the mortgage loan products they are obtaining. It is in the interests of the Department, its licensees, and the borrowers to ensure that the needs of mortgage customers are met in a manner that is safe and sound for the licensees, yet does not expose the borrowers to an undue level of risk that they may not fully understand.

In order to ensure that we have complete and accurate information in a timely manner, please ensure that the survey for your institution is completed and submitted (as further described below) on or before Wednesday, January 31, 2007. The efforts of you and your staff in providing this information to our Department is greatly appreciated.

To that end, the Commissioner is hereby requesting that licensees submit a special report, pursuant to California Financial Code sections 1934 and 14255, showing the following information:

  1. Whether your financial institution offers non-traditional mortgage loan products;
  2. If non-traditional mortgage loan products are offered, whether the loans are retained on the books of the financial institutions or whether the loans are sold in the secondary market;
  3. If non-traditional mortgage loan products are retained by the financial institution, the number of loans and the dollar amount (in thousands) of non-traditional mortgage products that were on the books of the financial institution as of December 31, 2006; and
  4. If non-traditional mortgage loans products are sold in the secondary market, the number and dollar amount (in thousands) of the non-traditional mortgage products that were originated during 2006.

Please read this letter thoroughly for instructions on how to download, save and email the call report form and instructions from the DFI Web site. If you do not have access to the Web, or cannot access the forms, please contact Patrick Carroll by telephone at (415) 263-8559 to make other arrangements. All licensees are requested to complete this form. If the financial institution does not offer non-traditional mortgage products, please complete the survey form as applicable to so indicate this fact.

For your convenience, the Non-Traditional Mortgage Loan Survey has been made into a Microsoft Excel form that can be downloaded from the DFI Web site, input on your computer, and emailed to DFI.

  1. Open your Web browser to: http://www.dfi.ca.gov/forms/forms.asp . Or, to navigate to the form from the DFI Home page, www.dfi.ca.gov , click on the "Forms" link in the right-hand navigation bar under the heading "Online Resources" then click "DFI Forms Master List."
  2. Locate the link to the following form in Excel format. For your convenience, the link to the form is
    http://www.dfi.ca.gov/forms/Non_Traditional_Mortgage_
    Survey_Form_SDC.xls    .
  3. Click on the link to the form.
  4. If the file/download box appears on your screen, click the open button to open the form.
  5. Enter your institution's Department of Financial Institutions license (charter) number in the appropriate place on the report. For your convenience, if you don't know the license (charter) number of your institution, this information can be found online at http://www.dfi.ca.gov/directory/db.asp for commercial banks, http://www.dfi.ca.gov/directory/ib.asp for industrial banks, and http://www.dfi.ca.gov/directory/cu.asp for credit unions.
  6. Complete filling in the form. Name the form MortgageSurvey.xls and save it to a familiar location on your computer.
  7. Print out and keep a hard copy of the forms in a file at the institution.
  8. Send the form as an email attachment to callreport@dfi.ca.gov on or before Wednesday, January 31, 2007.

It is not necessary to submit a hard copy of the form.

We appreciate your cooperation in furnishing us with accurate information in a timely manner.

Should you have any questions regarding this letter, the purpose of this survey, or the completion of the form, please contact Patrick Carroll at pcarroll@dfi.ca.gov or by telephone at (415) 263-8559.

Very truly yours,

PATRICK C. CARROLL
Strategic Support Manager