National banks may now apply for permission to sell reinsurance on mortgage loans they service.
Mellon Bank Corp. has became the first banking company to receive permission from the Office of the Comptroller of the Currency to sell reinsurance on its servicing portfolio. The ruling is dated Aug. 14, but only surfaced this week. Mellon officials did not return phone calls seeking comment.
No other banks have yet followed the Pittsburgh bank's lead and applied for similar permission.
Reinsurers sell part or all of the risk associated with an insured loan to a third party. Banks gained the option of selling reinsurance on mortgage loans they originated or purchased in January 1997. Since then, fewer than 10 banks have applied and won such authority.
An OCC spokesman downplayed the new policy's significance. "These activities are similar to activities we've already approved," said Kevin Mukri. Because banks perform credit analyses on loans that they service, as well as those that they originate or purchase, the agency views this type of reinsurance as a logical extension of banking, he said.