Federal Regulators Seek Comment on Subprime Mortgage Lending Statement

The federal financial regulatory agencies are seeking public comment for a proposed statement on subprime mortgage lending practices—specifically, those related to adjustable-rate mortgage (ARM) lending products.

The proposal addresses concerns that subprime borrowers may not fully understand the risks of obtaining these products and that the products may pose an elevated credit risk to financial institutions.

If adopted, this statement would complement the 2006 Interagency Guidance on Nontraditional Mortgage Product Risks, which did not specifically address the risks of these ARM products.

The agencies seeking comment are the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., the National Credit Union Administration, the Office of the Comptroller of the Currency and the Office of Thrift Supervision.