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AB – WASHINGTON — The Federal Deposit Insurance Corp. reiterated Monday that banks should look closely at potential losses on second mortgages and other kinds of home equity loans that could come under increased pressure as the foreclosure crisis continues.
In a financial institutions letter, the agency updated three-year-old guidance on accounting for losses on junior liens. It emphasized the need to consider not only historical performance factors but also current economic conditions, such as foreclosures and unemployment rates, when forecasting loan losses.
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