IMPROVEMENTS IN THE SUPERVISORY PROCESS.

SEC. 407. IMPROVEMENTS IN THE SUPERVISORY PROCESS. (a) Enhanced Flexibility in the Supervisory Process.— The Federal Home Loan Bank Board (acting as such under the Federal Home Loan Bank Act and in the Board’s capacity as the board of trustees of the Federal Savings and Loan Insurance Corporation under section 402(a) of the National Housing Act) shall issue guidelines which provide greater flexibility for supervisory agents, examiners, and other employees and agents of the Board, the Federal Savings and Loan Insurance Corporation, and the Federal home loan banks in applying regulations, standards, and other requirements of the Board or such Corporation with regard to particular situations or particular thrift institutions. (b) Particular Guidelines Required.— The guidelines issued under subsection (a) shall contain the following provisions: (1) Flexible approval process for renegotiated loans.— A provision establishing a flexible procedure for obtaining supervisory approval of the terms of loans renegotiated by thrift institutions if a supervisor agreement is in effect between such institution and the principal supervisor agent of the Federal home loan bank district where such institution is located. (2) Recognition of additional financial capability of a borrower.— A provision permitting examiners and other employees and agents of the Board, the Federal Savings and Loan Insurance Corporation, and the Federal home loan banks to take into account, to the extent consistent with the practices of the Federal banking agencies, other financial resources of a borrower (in addition to the financial assets of the borrower which are pledged to secure a loan) in classifying the assets of 101 STAT. 617the thrift institution which holds a loan made to such borrower or with recourse to the borrower. (3) Appraisal review.— A provision establishing an appraisal review system to avoid overly optimistic or conservative appraisals with the goal of achieving appraisals that are more consistent in reflecting underlying values. (4) 1-to-4 family residences.— A provision eliminating the scheduled item system except as such system relates to 1-to-4 family residences. (c) Definitions.— For purposes of subsections (a) and (b)— (1) Thrift institution.— The term “thrift institution” means— (A) any association (within the meaning given to such term in section 2(d) of the Home Owners’ Loan Act of 1933); (B) any insured institution (within the meaning given to such term in section 401(a) of the National Housing Act); and (C) any member (within the meaning given to such term in section 2(4) of the Federal Home Loan Bank. Act). (2) Board.— The term “Board” means the Federal Home Loan Bank Board. (3) Federal banking agency.— The term “Federal banking agency” means the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation. (d) Nonadversarial Review of Certain Supervisory Decisions.— The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended by inserting after section 22 the following new section: “SEC. 22A. INFORMAL REVIEW OF CERTAIN SUPERVISORY DECISIONS. “(a) Review of Certain Supervisory Decisions.— The Board shall establish an informal review procedure under which any association, insured institution, or member may obtain a review, by the principal supervisory agent for the Federal home loan bank district in which such association, institution, or member is located, of any decision by any examiner or supervisory agent of the Federal home loan bank for such district with respect to— “(1) the appraisal value of— “(A) any loan held by the association, insured institution, or member; or “(B) any property serving as collateral to secure the repayment of any loan (held by the association, institution, or member); “(2) the classification of any loan held by the association, institution, or member; or “(3) any requirement imposed on the association, institution, or member to establish or to add to a reserve or allowance for a possible loss on any loan held by such institution. “(b) Standards for Review.— The review procedure established pursuant to subsection (a) shall provide that the principal supervisory agent for the appropriate Federal home loan bank district, after taking into account the report described in subsection (c)(2) by the arbiter (or panel of arbiters), shall approve, modify, or set aside any decision for which a review has been requested on the basis of the supervisory agent’s review of all the facts and the regulations applicable to such decision and shall take such action as such agent 101 STAT. 618may determine to be necessary or appropriate in light of such review. “(c) Appointment of Independent Arbiter.— The review procedure established pursuant to subsection (a) shall provide for the appointment (by the principal supervisory agent for the appropriate Federal home loan bank district, upon the filing of a request for a review under this section by an association, insured institution, or member) of an independent arbiter (or, upon the request of such association, institution, or member, a panel of independent arbiters) who shall— “(1) review the decision which is the subject of the review in light of all the facts of the case and the regulations applicable to such determination; and “(2) report the conclusions and recommendations of the independent arbiter (or the panel) with respect to the decision under review to the principal supervisory agent for the appropriate Federal home loan bank district and the association, insured institution, or member. “(d) Consolidation of Reviews of Related Decisions.— The principal supervisory agent may consolidate requests for review under this section of related decisions and conduct a single review of all such related decisions. “(e) 25-Day Arbiter Review Period; 20-Day PSA Review Period.— “(1) Arbiter review.— The review procedure established pursuant to subsection (a) shall provide that any review described in subsection (c) by an arbiter (or panel of arbiters) shall be completed before the end of the 25-day period beginning on the date the request for the review was filed with the principal supervisory agent. “(2) Review by psa.— The review procedure established pursuant to subsection (a) shall provide that any review by the principal supervisory agent of an arbiter’s report described in subsection (c)(2) (or the report of a panel of arbiters) shall be completed before the end of the 20-day period beginning on the date the agent receives such report. “(3) Only business days included.— Saturdays, Sundays, and holidays shall not be taken into account in determining the periods described in paragraphs (1) and (2). “(f) Clarification of Relationship Between Informal Review and Other Available Review.— “(1) Informal review not exclusive.— The informal review procedure established pursuant to subsection (a) for reviewing any decision referred to in such subsection shall be in addition to, and not in lieu of, any other procedure established by law, or any regulation of the Board, which provides for formal administrative or judicial review of such decision. “(2) Only the original decision is within scope of administrative and judicial review.— If any association, insured institution, or member seeks administrative or judicial review of any examiner or supervisory agent decision for which such association, insured institution, or member obtained an informal review under the procedure established pursuant to subsection (a), such administrative or judicial review shall be carried out— “(A) without regard to the fact that such informal review was made; and 101 STAT. 619 “(B) without admitting into evidence, or otherwise taking into account, the findings, recommendations, or conclusions of the principal supervisory agent and the independent arbiter (or the panel of independent arbiters) which conducted the informal review. “(3) Informal review not subject to formal review.— The findings, recommendations, or conclusions of any principal supervisory agent who conducted a review under the procedure established pursuant to subsection (a) are not decisions which may be subject to review by the Board or any court under any regulation of the Board or any law. “(g) Expenses of Review Borne by Association, Institution, or Member.— All reasonable expenses incurred as a direct or indirect result of any review under the procedure established pursuant to subsection (a) shall be paid by the association, insured institution, or member which requested the review.”.