Highlights:
- The illustrations are intended to assist institutions in providing consumer information as discussed in the Consumer Protection Principles portion of the interagency Subprime Statement.
- A narrative illustration explains some of the key features of certain adjustable rate mortgage (ARM) loans identified in the Subprime Statement.
- The narrative emphasizes features that borrowers should understand - escrow payments or their absence, prepayment penalties, balloon payments, and premiums for no-doc/low-doc loans.
- Charts contain numerical examples that are designed to show the potential consequences of payment shock for an ARM loan structured with a reduced initial interest rate.
- Use of the illustrations by institutions is optional.
Distribution:
FDIC-Supervised Banks (Commercial and Savings)
Suggested Routing:
Chief Compliance Officer
Related Topics:
Statement on Subprime Mortgage Lending; Interagency Guidelines for Real Estate Lending; Interagency Guidelines on Subprime Lending; Expanded Examination Guidance for Subprime Lending Programs; Interagency Guidance on Nontraditional Mortgage Product Risks; and Unfair and Deceptive Acts and Practices by State-Chartered Banks
Attachment:
Proposed Illustrations - PDF 760k (PDF Help)
Contacts:
Samuel Frumkin, Senior Policy Analyst, at sfrumkin@fdic.gov or (202) 898-6602; or Richard Foley, Counsel, at rfoley@fdic.gov or (202) 898-3784
Printable Format:
FIL-40-2008 - PDF (PDF Help)
Note:
FDIC financial institution letters (FILs) may be accessed
from the FDIC's Web site at
www.fdic.gov/news/news/financial/2008/index.html
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters may be
obtained through the FDIC's Public Information Center,
3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-
275-3342 or 703-562-2200).
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