Residential Mortgage Lending
Our primary residential lending emphasis is on the origination and purchase
of first mortgage loans secured by properties that serve as the primary residence
of the owner. We also originate a limited number of second home mortgage loans.
Within our residential mortgage loan portfolio we have reduced documentation
loan products, substantially all of which are hybrid ARM loans (interest-only
and amortizing). Reduced documentation loans are comprised primarily of SIFA
(stated income, full asset) loans. To a lesser extent, our portfolio of reduced
documentation loans also includes SISA (stated income, stated asset) loans.
During the 2007 fourth quarter, we stopped offering reduced documentation loans.
Multi-Family and Commercial Real Estate Lending
Our primary multi-family and commercial real estate lending emphasis is on
the origination of mortgage loans on rent controlled and rent stabilized apartment
buildings located in the greater New York metropolitan area, including the five
boroughs of New York City, Nassau, Suffolk and Westchester counties in New York,
and parts of New Jersey and Connecticut.
Our policy generally has been to originate multi-family and commercial real
estate mortgage loans in the New York metropolitan area, which includes New
York, New Jersey and Connecticut.
Consumer and Other Loans
The underwriting standards we employ for consumer and other loans include a
determination of the borrower’s payment history on other debts and an
assessment of the borrower's ability to make payments on the proposed loan and
other indebtedness. In addition to the creditworthiness of the borrower, the
underwriting process also includes a review of the value of the collateral,
if any, in relation to the proposed loan amount. In general, home equity and
other consumer loans tend to have higher interest rates, shorter maturities
and are considered to entail a greater risk of default than residential mortgage
loans.
Loan Approval Procedures and Authority
For mortgage loans secured by residential properties, upon receipt of a completed
application from a prospective borrower, we generally order a credit report,
verify income and other information and, if necessary, obtain additional financial
or credit related information. For mortgage loans secured by multi-family properties
and commercial real estate, we obtain financial information concerning the operation
of the property as well as credit information on the principal and borrower
entity. Personal guarantees are generally not obtained with respect to multi-family
and commercial real estate loans. An appraisal of the real estate used as collateral
for mortgage loans is also obtained as part of the underwriting process. All
appraisals are performed by licensed or certified appraisers, the majority of
which are licensed independent third party appraisers. We have an internal appraisal
review process to monitor third party appraisals.