The Federal Deposit Insurance Corporation (FDIC) has issued new proposed examination guidance for bank compliance when engaged in lending through third parties. The new proposal would apply to all banks engaged in “any lending arrangement that relies on a third party to perform a significant aspect of the lending process” as well as institutions seeking to originate loans with banks.
The proposed guidance focuses specifically on three types of third-party relationships, including:
- Banks that originate loans for third parties;
- Banks that originate loans through third parties or jointly with third party lenders; and
- Banks that original loans using platforms developed by third parties.
Highlights from the proposed guidance include:
- Development and implementation of a third-party lending risk management program and compliance management system with adequate staffing to ensure proper oversight;
- Implementation of third party lending policies and procedures by senior management with board approval;
- Establishment of processes to evaluate and monitor third-party lending relationship risks and compliance;
- Increased supervisory attention — including a 12-month examination cycle, third party contract reviews, and risk management and consumer protection examinations — for banks engaged in significant lending activities through third parties.
Comments on the proposed examination guidance will be accepted until October 27, 2016.
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