Industry News

Realtors welcome new guidelines on nontraditional mortgages

Bankers say they will stifle competition, choice

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Trade associations representing Realtors and lenders differ on new underwriting and disclosure guidelines for nontraditional mortgages. The guidelines, issued last week by federal bank regulators (see story), require banks to use more restrictive standards in evaluating borrowers' ability to repay interest-only and pay-option adjustable-rate mortgages, and to more fully disclose their costs. The National Association of Realtors says it "strongly supports efforts to educate consumers" and that the guidelines will "ensure that lenders inform consumers about the risks related to nontraditional financing options." NAR "is very concerned that some borrowers are using nontraditional mortgages without fully understanding the risks involved," said NAR President Thomas M. Stevens in a statement. NAR and the Center for Responsible Lending last year created an educational brochure, "Specialty Mortgages: What are the Risks and Advantages," for Realtors to use in counseling clients. The Mortgage ...