On February 2, 2005, the Office of the Comptroller of the Currency ("OCC") issued Guidelines Establishing Standards for Residential Mortgage Lending Practices. The Guidelines should be viewed by national bank lenders as a set of minimum standards that the OCC will test against in consumer examinations. The Guidelines state that national banks should not become involved, directly or indirectly, in the following residential mortgage lending practices:

Equity stripping and fee packing;

Loan flipping;

Refinancing special mortgages; and

Encouragement of default.

The Guidelines identify 12 additional loan terms, conditions and features that are considered to be susceptible to abusive, predatory, unfair or deceptive practice allegations under certain circumstances. The Guidelines reflect the increased scrutiny of the OCC on bank lending practices to ensure fair treatment to vulnerable "high risk" consumers. Banks are well advised to ensure that their lending practices conform to the parameters set forth in the Guidelines in anticipation of vigorous consumer lending examinations.