12 C.F.R. § 614.4150

Lending policies and loan underwriting standards

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Under the policies of its board, each institution shall adopt written standards for prudent lending and shall issue written policies, operating procedures, and control mechanisms that reflect prudent credit practices and comply with all applicable laws and regulations. Written policies and procedures shall, at a minimum, prescribe:

(a) The minimum supporting credit and financial information, frequency for collection of information, and verification of information required in relation to loan size, complexity and risk exposure

(b) The procedures to be followed in credit analysis

(d) Requirements for collateral and methods for its administration

(e) Loan approval delegations and requirements for reporting to the board

(f) Loan pricing practices

(g) Loan underwriting standards that include measurable standards:

(1) For determining that an applicant has the operational, financial, and management resources necessary to repay the debt from cashflow

(2) That are appropriate for each loan program and the institution's risk-bearing ability; and

(3) That consider the nature and type of credit risk, amount of the loan, and enterprises being financed

(h) Requirements that loan terms and conditions are appropriate for the loan; and

(i) Such other requirements as are necessary for the professional conduct of a lending organization, including documentation for each loan transaction of compliance with the loan underwriting standards or the compensating factors or extenuating circumstances that establish repayment of the loan notwithstanding the failure to meet any one or more loan underwriting standard.

[62 FR 51014, Sept. 30, 1997]

Notes of Decisions

Cited in 3 cases, 1983–2016 · leading case: Wiley v. Fed. Land Bank of Louisville, 657 F. Supp. 964 (S.D. Ind. 1987).

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Wiley v. Fed. Land Bank of Louisville, 657 F. Supp. 964 (S.D. Ind. 1987). “Reference is also made in various counts to violation of 12 C.F.R. Sections 614.4150 and 4250, Farm Credit Regulations, and 15 U.”

VanLeeuwen v. Farm Credit Admin., 577 F. Supp. 264 (D. Or. 1983). “Analysis shall include a careful evaluation of character 12 C.F.R. § 614.4150 (a) (emphasis added).”

Earl Heller v. First Light Fed Credit Union, 669 F. App'x 287 (5th Cir. 2016). “He further asserts that First Light and Mor-tenson violated 12 C.F.R. § 614.4150 by not accurately considering Heller’s ineome-to-debt ratio when reviewing his loan application.”

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