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Agencies Issue Guidance on Junior Lien Loan Loss Allowances




​Joint Release

​Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency

For Immediate Release

January 31, 2012 

 Agencies Issue Guidance on Junior Lien Loan Loss Allowances

Four federal financial regulatory agencies on Tuesday issued supervisory guidance on allowance for loan and lease losses (ALLL) estimation practices associated with loans and lines of credit secured by junior liens on one- to four-family residential properties. 
The agencies issued the guidance to reiterate policy and to remind regulated financial institutions to monitor all credit quality indicators relevant to credit portfolios, including junior liens.  Examples of junior liens include second mortgages and home equity lines of credit taken out by mortgage borrowers.
The Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of  the Comptroller of the Currency reiterate key concepts included in generally accepted accounting principles and existing ALLL supervisory guidance related to the ALLL and loss estimation practices.  Regulators also remind institutions to follow appropriate risk-management principles in managing junior lien loans and lines of credit.

Interagency Supervisory Guidance
NCUA Accounting Bulletin # 12-1


Media Contacts:
​Federal Reserve ​Barbara Hagenbaugh ​(202) 452-2955
​FDIC ​David Barr (202) 898-6992
​NCUA ​​John Zimmerman (703) 518-6336
​OCC ​Dean DeBuck (202) 874-5770

NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 100 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.


National Credit Union Administration

Office of Public & Congressional Affairs



John Fairbanks
Office: 703.518.6336
Mobile: 571.438.0801

Ben C. Hardaway
Office: 703.518.6333
Mobile: 703.298.5223

Kenzie Snowden
Office: 703.518.6334

"Protecting credit unions and the consumers who own them through effective regulation"