Banks' line employees who are involved in virtually every aspect of loan applications will be scrutinized under the Federal Deposit Insurance Corp.'s revised examination procedures for monitoring compliance with fair housing laws.

This means that far more people than just the manager had better be in line with the bank's compliance program for carrying out the nation's anti-discrimination laws. The new exam procedures, in effect today, are being integrated into the examination field force as quickly as possible.

The rules will affect only FDIC-insured banks and thrifts, but they are part of a broader regulatory effort under the auspices of the Federal Financial Institutions Examination Council.

Regulators are to apply exam strategies that will be analyzed and appropriately incorporated into a consolidated interagency guideline for monitoring and enforcing fair lending laws.

Mortgage bankers, whose primary federal regulator is the Department of Housing and Urban Development, won't be covered by the rules. But their day may be coming, given HUD Secretary Henry Cisneros' oft-stated determination to fight mortgage lending discrimination.

Since the new process is being incorporated into the new exam cycle, banks should expect the new guidelines to be followed during the next applicable examination.

Examiners on the prowl for discrimination will interview employees responsible for responding to loan inquiries and taking applications to determine what policies and procedures are being followed.

In other words, the FDIC wants to know whether the bank's articulated lending standards agree with the standards applied by the bank officials taking and processing applications.

The FDIC's examiner force will look carefully at how a bank evaluates creditworthiness or eligibility, based on information it obtains from telephone conversations, particularly from questions concerning property location. Also to be examined closely is whether a bank uses outside persons to refer or advise applicants and, if so, what their training and instructions are.

The FDIC will review whether a loan official or the applicant fills out the loan application and whether anyone has been designated to review the applicant's financial data or property characteristics to determine eligibility before the application is submitted to the loan review board.

Examiners are also interviewing lending personnel to determine the criteria for credit decisions. The interview is supposed to be structured to determine the person's familiarity with the bank's established credit policy and prohibitions imposed by the Fair Housing Act and the Equal Credit Opportunity Act regarding real estate transactions.

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