Issuing a warning to national banks, Comptroller of the Currency Eugene A. Ludwig on Thursday said the quality of affordable mortgage portfolios has deteriorated.

"We have recently noticed some decline in asset quality and increased delinquency patterns in some national banks' affordable mortgage portfolios," Mr. Ludwig told the National Association of Affordable Housing Lenders in Dallas.

"These patterns, while not pervasive, underscore the importance of effective credit underwriting standards and portfolio credit risk management processes," he added.

Many national banks have only recently begun offering affordable mortgages, which generally require low down payments, Mr. Ludwig said. Therefore, these institutions are not very experienced in underwriting these loans.

Within the next month, the agency plans to issue an advisory letter detailing the credit quality problems. It will recommend how national banks can better manage their affordable mortgage portfolios.

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