Board of Governors of the Federal Reserve System

The federal financial regulatory agencies today issued final illustrations for helping consumers understand certain hybrid adjustable-rate mortgage (ARM) products.

The agencies' Statement on Subprime Mortgage Lending (Subprime Statement), which became effective July 10, 2007, recommended that institutions provide clear, balanced, and timely information to consumers about the relative benefits and risks of hybrid ARM products.  The illustrations are intended to assist institutions in providing this information.

The illustrations consist of (1) an explanation of some key features of products covered by the Subprime Statement; and (2) three charts with examples of the potential payment shock accompanying these types of loans.
 
Institutions are not required to use the illustrations.  They may use them, provide information based on them, or provide consumers with information described in the guidance in an alternate format.

The agencies will be posting the illustrations on their websites for downloading and printing.  In particular, versions of the illustrations will be posted in English and in Spanish together with a template of the illustrations that institutions can modify to reflect the latest market conditions. 

The final document, Illustrations of Consumer Information for Hybrid Adjustable Rate Mortgage Products, is attached.

Federal Register Notice:  760 KB PDF | TEXT