FSB has published a set of principles for “Sound Residential Mortgage Underwriting”. The principles address five areas which were particularly weak during the financial crisis:

  • effective verification of income and financial information;
  • reasonable debt service coverage;
  • appropriate loan-to-value ratios;
  • effective collateral management; and
  • prudent use of mortgage insurance.

The Principles also include an implementation framework and set out guidance on effective supervisory tools and powers. (Source: FSB Publishes Principles for Residential Mortgage Underwriting)