Tougher
mortgage regs due?
Report: Fed banking regulators consider guidelines
that
may limit the number of risky mortgages.
NEW YORK (CNN/Money) -
Federal banking regulators are weighing new guidelines for
mortgage lenders due to growing concern about risks in the
mortgage market, according to a published report.
The Wall Street Journal
reports that the new guidelines could be completed as soon
as early next year.
Recent years have seen
a growth in several different types of mortgages that regulators
are concerned pose greater risk for both borrowers and lenders.
They include interest-only mortgages or loans for which
borrowers provide little or no documentation of their financial
resources or loans that are structured in a manner that
can result in a rising rather than declining principal balance.
"There's a consensus
among regulators that we need to be working on this,"
said Barbara Grunkemeyer, deputy comptroller for credit
risk at the Office of the Comptroller of the Currency. The
newspaper said the agency is taking the lead on the new
guidelines.
Regulators are also likely
to address the risks to borrowers and lenders posed by the
increasing popularity of the more traditional adjustable-rate
mortgages, (ARMs) according to the newspaper.
"Borrowers are going
for the ARMs because they can qualify for a slightly bigger
mortgage," Grunkemeyer said. "There are a lot
of issues to be addressed there."
http://money.cnn.com/2005/05/19/real_estate/mortgage_guidelines/index.htm
© 2005 Cable News Network
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