Public Comment, Subprime Mortgage Lending, City Bank, Lynwood, MA

March 30, 2007 Robert E. Feldman, Executive Secretary Attention: Comments FDIC th550 17 Street NW Washington, DC 20429 RE: Comments on Subprime Mortgage Lending Dear Mr. Feldman: Below are our comments on the concerns raised under the joint agency comment request on Subprime Mortgage Lending. Concern 1: Do these arrangements always present inappropriate risk to institutions and consumers that should be discouraged, or alternatively, when and under what circumstances are they appropriate? Generally, yes these types of loans present a substantial risk to both the consumer and the financial institution. A review of the history of any subprime loan would likely indicate that the borrower was forced to either sell the property or refinance at the time the loan reset. Rare is the borrower that can make the new loan payment, which results from an interest rate increase of 4% - 6%. It would be even more unusual to find any subprime borrower with the financial capacity to do so. Depending on the specific loan, this payment increase will happen in two or three years. These loans create a built-in refinance pipeline for the subprime loan originator. There exist certain borrower profiles that result in appropriate risk for these programs. These profiles are generally the result of exterior issues and were beyond the control of the borrower. The issues happened in the past and the situation no longer exists. The borrower’s ...