The Federal Reserve Board is revising an interim final rule it approved in September to make changes to the disclosures required for interest-only, payment-option and 5/1 hybrid adjustable-rate mortgages.
At the same time, the Fed is giving lenders more time to comply with the disclosures mandated by the Mortgage Disclosure Improvement Act that are slated to go into effect Jan. 30.
"Creditors have the option of complying with either the Board's September's 2010 interim rule as originally published or as revised by this interim rule until October 1, 2011, at which time compliance with this interim rule will be mandatory," the Fed said.
The September interim rule requires payment examples that reflect changes in the interest rate and monthly payments. Lenders also have to issue a statement that there is no guarantee they will be able to refinance the loan in the future.
The interim rule revises the September rule in response to public comments.
For 5/1 hybrid ARMs, the September interim rule requires the creditors to disclose the maximum interest rate and payment during the first five years.
"As modified by [the December] rule, creditors must base their disclosures on the first five years after the first regular periodic payment due date, rather than the first five years after consummation," the Fed said.