Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision
National Credit Union Administration
Conference of State Bank Supervisors

For Immediate Release                                                                                                                            September 4, 2007

Federal Financial Regulatory Agencies and CSBS Issue Statement On
Loss Mitigation Strategies for Servicers of Residential Mortgages

            The federal financial regulatory agencies and the Conference of State Bank Supervisors (CSBS) on Tuesday issued a statement encouraging federally regulated financial institutions and state-supervised entities that service securitized residential mortgages to review to determine the full extent of their authority under pooling and servicing agreements to identify borrowers at risk of default and pursue appropriate loss mitigation strategies designed to preserve homeownership.

Significant numbers of hybrid adjustable-rate mortgages will reset throughout the remainder of this year and next.  Many subprime and other mortgage loans have been transferred into securitization trusts that are governed by pooling and servicing agreements.  These agreements may allow servicers to contact borrowers at risk of default, assess whether default is reasonably foreseeable, and, if so, apply loss mitigation strategies designed to achieve sustainable mortgage obligations.  Servicers may have the flexibility to contact borrowers in advance of loan resets.          

Appropriate loss mitigation strategies may include, for example, loan modifications, conversion of an adjustable rate mortgage into a fixed rate, deferral of payments, or extending amortization.  In addition, institutions should consider referring appropriate borrowers to qualified homeownership counseling services that may be able to work with all parties to avoid unnecessary foreclosures.          

The statement, which was issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Administration, and CSBS, is attached.

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Attachment: http://www.fdic.gov/news/news/press/2007/pr07073a.html

Media Contacts:

Federal Reserve           Susan Stawick                          202-452-2955

FDIC                           Andrew Gray                           202-898-7192

OCC                            Kevin Mukri                             202-874-5770

OTS                             William Ruberry                        202-906-6677

NCUA                         John McKechnie                      703-518-6331

CSBS                          Michael Stevens                       202-728-5701