U.S. house prices haven’t yet bottomed out in regional markets clogged by the slow handling of foreclosures, according to Martin Pfinsgraff, a deputy comptroller at the Office of the Comptroller of the Currency.

“It does not appear that we have yet hit bottom in the pricing of housing stock in many regional markets and the issues attendant to resolution of foreclosure processing have delayed market clearing from occurring more quickly,” Pfinsgraff, who focuses on credit and market risk at the agency, said in a speech today in New York.

Pfinsgraff also said the OCC has watched declining fee income and loan demand at its regulated banks. That’s creating“competitive pressures” to lower standards for underwriting and price.

“We are seeing that trend in high yield, cards, and commercial and industrial loans at present,” he said, adding that the agency isn’t alarmed because volumes remain low. “The trend will be worth monitoring closely. Our examiners will be turning more of their attention to new product risks and spending less time on evaluation of legacy assets.”

As the OCC and other financial regulators investigate what happened in the recent loss of at least $2 billion at JPMorgan Chase & Co. (JPM), Pfinsgraff offered risk advice to bank boards.

“One red flag we warn directors about are risk managers who respond to a query that, ‘It’s complicated,’” he said.“Our message to the boards is if you don’t understand, you should ask, and if a risk or activity cannot be explained in terms you can understand, your bank should probably not do it.”

To contact the reporter on this story: Jesse Hamilton in Washington at jhamilton33@bloomberg.net.

To contact the editor responsible for this story:Maura Reynolds at mreynolds34@bloomberg.net.