BANKING
Several federal agencies issued final illustrations to
help lending institutions implement the consumer protection portion of
the Interagency
Guidance on Nontraditional Mortgage Product Risks those
agencies adopted in October 2006.
The guidance issued by the Federal Reserve, FDIC, National
Credit Union Administration, Office of the Comptroller of the
Currency, and Office of Thrift Supervision outlines recommended
practices to give consumers clear and balanced information about
nontraditional mortgages before they choose a mortgage product or
select a payment option for an existing mortgage. The illustrations
include:
Disclosures about interest-only and payment option
mortgages.
A chart that compares the required monthly payments of
traditional fixed mortgages, five-year interest-only adjustable-rate
mortgages (ARMs), and payment option ARMs and their effects on loan
balances over the life of the loan.
A table that could be included with any monthly statement
for a payment option ARM providing information on the effects of
various payment options on the loan balance.
The illustrations are not mandatory. Institutions may choose to use the illustrations, provide information based on the illustrations, or provide consumer information described in the guidance in an alternate format. The full text of the guidance is available at www.fdic.gov/news/news/press/2007/pr07044a.pdf .
The Federal Reserve Board approved a final rule to
implement section 601 of the Financial Services Regulatory Relief Act
of 2006, which eliminated several reporting and disclosure
requirements for insider lending by insured depositary institutions.
The Fed proposed eliminating the statutory requirements because
federal banking agencies have not found them useful in monitoring
insider lending or preventing insider abuse.
Regulation O, which governs insider lending, will continue to
require depositary institutions and insiders to maintain sufficient
information to enable examiners to monitor compliance with the
regulations. Federal banking agencies will retain authority to collect
information on insider lending.
The rule, which took effect July 2, is available at http://edocket.access.gpo.gov/2007/pdf/E7-10402.pdf .
