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Pictures Can Say A Thousand Loans

One of the common refrains of borrowers about to be swallowed by an adjustable mortgage is

I have heard of mortgage resets but I had no idea this would happen. I need some help.

…but if I had a picture of what would happen, perhaps I would not gotten into this predicament… I am skeptical that if this were in place before the mortgage boom it would have made much of a difference but still, I think its a good idea to help clarify things.

You have to remember, the urge to purchase was overriding logic. For example, 50 year mortgages were introduced to keep the payments low.

In order to reduce this “deer in the headlights” problem for borrowers, the FDIC is specifically targeting subprime borrowers with this announcement:

Federal Financial Regulators Propose Illustrations of Consumer Information to Support Their Statement on Subprime Mortgage Lending [1]

Hey, its not going to prevent fraud and financial tragedy, its a start in the right direction. Of course, it sets back the movement towards reducing the regulatory paperwork.

Here is the announcment with the illustrations attached [2].