Saturday, 30th June 2007

Federal Financial Regulatory Agencies Issue Final Federal Financial Regulatory Agencies Issue Final

Federal Financial Regulatory Agencies Issue Final Federal Financial Regulatory Agencies Issue Final
Source: Office of Thrift Supervision (USDoT)

The federal financial regulatory agencies today issued a final Statement on Subprime Mortgage Lending to address issues relating to certain adjustable-rate mortgage (ARM) products that can cause payment shock.

The statement describes the prudent safety and soundness and consumer protection standards that institutions should follow to ensure borrowers obtain loans they can afford to repay. These standards include a fully indexed, fully amortized qualification for borrowers and cautions on risk-layering features, including an expectation that stated income and reduced documentation should be accepted only if there are documented mitigating factors that clearly minimize the need for verification of a borrower’s repayment capacity. Consumer protection standards include clear and balanced product disclosures to customers and limits on prepayment penalties that allow for a reasonable period of time, typically at least 60 days, for customers to refinance prior to the expiration of the initial fixed interest rate period without penalty.

+ Full Document (PDF; 138 KB)

Category:

• Business and economics (DocuTicker)
• Consumer issues (DocuTicker)
• Housing and real estate (DocuTicker)

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