It took me a while – but I think I’m understanding your post better.
The OCC (Office of the Comptroller of the Currency) is concerned over non-traditional mortgage lending products – this is the basis for possible future changes in underwriting guidelines the OCC would like to see implemented.
Based on changes that took place on minimum required payments on revolving credit cards/accounts it is reasonable to assume that the OCC, the Federal Reserve, the OTS and FDIC as well as other agencies might call for more stringent underwriting and management (for lack of a better word) practices with regard to targeted loan programs.
While it is plausable to assume that “guidance” and moral suasion will affect these targeted loan programs offered through governed and/or insured institutions it is highly unlikely, in my opinion, that the terms and conditions of outstanding instruments could be unilaterally modified. Hence, future originations of these types of loans may be impacted but I find it hard to believe that outstanding loans could be at all affected.
Without having done research to back this up I would be willing to bet money that future guidance will NOT be able to affect the terms agreed to at some prior date – which is what the promissory note is all about.
We then have the issue of what percentage of the targeted non-traditional mortgages are originated by institutions who are overseen by the OCC. I would hazard a quess that the majority of these instruments are ultimately packaged into either mortgage backed securities or placed in some type of asset backed instrument which is funded by/through Wall Street.
Again, while I can see a future “tightening” of underwriting standards I can’t imagine the terms of already outstanding loans being affected.
