Industry News

Tighter standards for new mortgages coming soon

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

New guidelines that would require banks to tighten underwriting standards and track portfolio risks on nontraditional mortgages while providing more comprehensive disclosures to borrowers will be finalized this fall, a federal regulator told members of the Senate Banking Committee Wednesday. Kathryn E. Dick, deputy comptroller of the Office of the Comptroller of the Currency, said that interest-only and payment-option adjustable-rate mortgages (ARMs) are complex products that are often marketed to people who don't understand their risks. Guidelines instructing banks to do a better job informing consumers of those risks will be finalized in "weeks, not months," she said. "Our ... fundamental concern is: Do borrowers who use these products understand the very real possibility of dramatically increased payments in the future?" Dick said in written testimony at a Senate Banking Committee hearing this week. To answer that question, the OCC looked at marketing materials used by...