By the Division of Banks

January 2, 2007



To the Chief Executive of the Licensee Addressed:

This letter is to inform you that the Division of Banks (the "Division") has issued Regulatory Bulletin 5.1-103 (the "Bulletin") to clarify how mortgage lenders and mortgage brokers can offer nontraditional mortgage products in a way that clearly discloses the risks that borrowers may assume. The effective date of the Bulletin is January 8, 2007.

As you may recall, on November 14, 2006, the Division sent an industry letter with a copy of the proposed Bulletin to licensed lenders and brokers as well as to related associations. The guidance relative to nontraditional mortgage product risks contained in the Bulletin substantially mirrored federal guidelines issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Controller of the Currency, the Office of Thrift Supervision, and the National Credit Union Administration on October 4, 2006 to all banks and their subsidiaries, bank holding companies and their nonbank subsidiaries, savings associations and their subsidiaries, savings and loan holding companies and their subsidiaries and credit unions.

The Division's industry letter provided for accepting comments and proposed revisions to the Bulletin from interested parties through December 4, 2006. The Division appreciates the time taken by those individuals who submitted comments on the guidelines. The Division acknowledges that a few proposed revisions were raised during the comment period. After extended review, the Division has concluded that the guidelines, as proposed by the Division, should remain intact.

All licensed mortgage lenders and brokers should carefully review the Bulletin. The copy of the Bulletin mailed to you in November can be used as your reference. In addition, the Bulletin is published by the Division at Commenters asked for clarification on issues raised in the Bulletin. In response to these requests, the Division will also publish answers to frequently asked questions ( FAQs) relative to the Bulletin on the Division's web site. If you have any questions, please feel free to contact John M. Prendergast, Chief Risk Officer, at 617-956-1500, extension 534.

Very truly yours,

Steven L. Antonakes
Commissioner of Banks