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Important Notices

September 4, 2007

DFI - Nontraditional Mortgage Survey

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

Dear Sir or Madam:

The delinquency and foreclosure trends in non-traditional mortgage loans continue to increase since our January 12, 2007, survey on these products. The foreclosure trends have drawn increased scrutiny from a wide range of sources, with concerns being expressed regarding the large number of foreclosures and the measures that underwriters may have taken to provide for refinancing into a more affordable mortgage or other work-out options to enable borrowers to avoid foreclosure. The California State Senate Committee on Banking, Insurance and Finance has held three hearings on various aspects of non-traditional mortgages, subprime lending and achieving the American dream of home ownership, and Congress continues to discuss options to deal with the issues at hand. It is in the interests of the Department of Financial Institutions, 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 of foreclosure. The attached survey is designed to ensure that the Department maintains complete, accurate, and up to date information on this issue with regard to our licensees.

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

1. Whether your financial institution holds non-traditional mortgage loan products;
2. If non-traditional mortgage loan products are held, the status of delinquencies, foreclosures, short sales, rewrites and workouts;
3. If your financial institution provides mortgage servicing on non-traditional loans not held by your institution, the total loan servicing volume and the number of entities you provide this service to;
4. If your financial institution provides mortgage servicing on non-traditional loans not held by your institution, the parameters you may have been given by the serviced entity to rewrite or modify loans that have the probability of default or are in the process of foreclosure; and
5. If your institution makes ADC loans or other construction/development loans, the number and dollar volume of such loans that a have a take-out or permanent loan commitment.

Please carefully review and follow the instructions on how to download, save and email the survey form and instructions from the DFI Web site. If you do not have access to the Web, or cannot access the forms, please contact Kristine De Young by telephone at (916) 324-7488 or by e-mail at kdeyoung@dfi.ca.gov to make other arrangements. All licensees are required to complete this form. If the financial institution does not offer non-traditional mortgage products, please complete the survey form as applicable to 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. It is not necessary to submit a hard copy of the form.

1. Open your Web browser to: http://www.dfi.ca.gov/forms/. 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/bank/NTMSurvey.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 NTMSurvey.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 Friday, September 14, 2007.

Please ensure that the survey for your institution is completed and submitted on or before Friday, September 14, 2007. The efforts of you and your staff in providing this information to our Department is greatly appreciated.

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.

Sincerely,

MICHAEL A. KELLEY, Commissioner