Risky Mortgage Lending Warning

Federal regulators are concerned about the expanding use of interest-only adjustable rate mortgages and option ARMs. With both loans, payments are kept low for a few years before being raised. In 2006, about $300 billion worth of ARMs were due to be reset at higher rates. The economic cost of this restructuring will be felt as homeowners pay more in interest on their loans and less on appliances, furniture and other home improvements. The Feds will tell lenders to fully inform applicants of the risks with these types of loans.