The Federal Home Loan Bank of Cincinnati (“FHLBank Cincinnati”) supports the expansion of fair and equitable home ownership opportunities. To discourage predatory lending practices, which are inconsistent with such opportunities, and to protect FHLBank Cincinnati from potential liabilities, FHLBank Cincinnati has established an Anti-Predatory Lending Policy (“APL Policy”). The General APL Policy has been further segregated to more specifically cover collateral supporting advances (APL Policy for Collateral) and for mortgages purchased under the Mortgage Purchase Program (“MPP”) (APL Policy for Acquired Member Assets), collectively known as the “APL Policies”.
The FHLBank Cincinnati requires that Residential Mortgage Collateral supporting advances or sold into the MPP program comply with applicable federal, state and local anti-predatory lending laws and other similar credit-related consumer protection laws, regulations and orders designed to prevent or regulate abusive and deceptive lending practices and loan terms (collectively, “Anti-Predatory Lending APL Laws”). For example, Anti-Predatory Lending APL Laws may prohibit or limit certain practices and characteristics, including, but not limited to the following:
- Requiring the borrower to obtain prepaid, single-premium credit life, credit disability, credit unemployment, or other similar credit insurance;
- Requiring mandatory arbitration provisions with respect to dispute resolution in the loan documents;
- Charging prepayment penalties for the payoff of the loan beyond the early years of such loan; or
- Originating high cost loans that, for example, exceed the annual percentage rate, fee, or points thresholds of the Home Ownership and Equity Protection Act of 1994 and its implementing regulations (Federal Reserve Board Regulation Z).
The FHLBank will take reasonable steps to verify compliance with the APL Policies, including but not limited to the following: (1) review Member regulator exam reports for findings pertaining to unfair and/or abusive lending practices; (2) monitor Member regulator alerts for newly issued supervisory agreements or cease-and-desist orders pertaining to unfair and/or abusive lending practices; (3) during the normal course of onsite collateral reviews, review loan documentation for compliance with provisions of this policy; and (4) conduct pre-purchase screening and post-purchase due diligence reviews of a representative sample of loans sold into the MPP program. Remedies for noncompliance are more fully discussed in the appropriate APL policy.
These APL Policies are intended to underscore the FHLBank’s support of fair lending practices through clear communication of what will constitute eligible residential mortgage loans for pledging as collateral or for sale into the MPP program. The APL Policies can be accessed through our Web site, www.fhlbcin.com, under the respective Policy Manuals for the Credit or MPP programs.