Generating the best price for the bank at all costs may only result in cosmetic changes and risk serial non-performance of the assets. Third, not all of the resulting bank losses should simply be footed by the government. As a majority shareholder of public sector banks, the government runs the risk of ending up paying for it all.
As with all business lines, the mortgage lending strategy needs to be clearly articulated at the board of directors level. The strategy that the board articulates should include such basics as the anticipated range of risk parameters intended in the mortgage portfolio. A portfolio limited to prime single-family residential loans would presume risk-management tools consistent with that portfolio.