The Board in conjunction with the Office of Thrift Supervision issued a revised version of its venerable Consumer Handbook on Adjustable-Rate MortgagesThe brochure was developed "in consultation with the following organizations" which included some members of the housing industrial complex (Mortgage Bankers Association, National Association of Home Builders, National Association of Realtors) who cannot be trusted.
(the CHARM booklet.)
Under the Board's Regulation Z, every lender must provide a copy of the CHARM booklet or a suitable substitute to every borrower who makes application for an adjustable rate mortgage. The booklet which was originally published in 1987 has been periodically updated but with the current concern about borrowers overextending themselves by choosing ARMs during a period of rising rates and putting themselves at even greater risk by picking so called exotic variations on ARMs such as interest only or option ARMs, the revised booklet is timely and one hopes also helpful.
The book has a solid discussion of how ARMS work. However, the big picture risks are not properly detailed.
For example, there is NO mention of the risks of foreclosure or losing your housing unit. [Search the brochure, the word 'foreclosure' is NOT mentioned.] The Federal Reserve Board should be ashamed of their lousy brochure. How can one write a proper 37 page brochure about ARMs and not mention the term foreclosure?