Industry News

Tighter standards for new mortgages coming soon

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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...