The Office of the Comptroller of the Currency has added mortgage banking to the areas covered by its new supervision-by-risk program.

In an examination handbook released Wednesday, the OCC said it is concerned about eight risks in mortgage banking. These include the risk that the borrower will not repay the loan, the risk that interest rates will change, and the risk that the bank will violate the agency's rules.

The supervision-by-risk program requires examiners to identify a bank's exposure to each of these risks. The examiner also must look at the steps the institution has taken to address those risks. Examiners then use this information to target their reviews at potential trouble spots.

Comptroller Eugene Ludwig said in a prepared statement that the handbook should alert bankers to the "responsibilities, opportunities, and challenges" that accompany buying and selling mortgages.

The new policy is effective immediately. The OCC already has released supervision-by-risk guidelines for large and small banks.

The OCC began supervising mortgage banking operations at national banks in the late 1980s. The agency has never previously published exam guidelines for this business. Copies are available from the OCC.

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