Wednesday, October 11, 2006

Federal government inter-agency guidance

Here's a press release along with attachments regarding recent guidance released as a joint project of the Federal Reserve, Comptroller of the Currency, FDIC, Office of Thrift Supervision, and the Nat'l Credit Union Administration.

The guidance is suprisingly positive regarding many of the non-traditional mortgage products such as payment-option and interest-only loans.

Some of the big warnings expressed are regarding no document loans, "piggyback" loans where the two loans are interest-only, and non-owner occupancy loans. When a buyer doesn't plan on living in a home, the likelihood of default or foreclosure increases dramatically.

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