WASHINGTON DC, June 26, 2007 -- The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) today issued a consumer alert urging homeowners with adjustable rate mortgages – especially those with nontraditional mortgages – to plan now for the scheduled “recasts” or “resets” of interest rates in the year ahead.
The advisory urges borrowers to:
- Seek information on the characteristics of your mortgage
- Budget accordingly
- Contact your servicer for assistance, if needed
- Inquire about possible solutions if payments are past due
The advisory notes that nontraditional mortgage loans and many subprime loans frequently feature a recast (or reset) with a significant payment increase.
CSBS and AARMR applauded efforts by the NeighborWorks organization, which has established a hotline (888-995-HOPE) to reach struggling homeowners with strategic solutions.
CSBS and AARMR also issued an industry letter encouraging mortgage servicers and providers to reach out to consumers to provide information on their loans and to work with consumers to avoid foreclosure.
“Servicers should provide information on when the recast will occur and how much the monthly payment will adjust,” said CSBS Senior Vice President for Regulatory Affairs Michael Stevens.
“Should the loan go into default, servicers should consider workout arrangements to prevent foreclosures,” he said.
The Consumer Alert and Industry Letter are on the CSBS’s Regulatory Affairs website.