News Update: Fed plans mortgage payment disclosure rule

The Federal Reserve issued a package of rules and proposals for mortgages on Monday, which included a measure that would require lenders to disclose to borrowers how their mortgage payments can change over time.

The interim measure, which will take effect on Jan. 30 of next year, makes sure borrowers are aware of the risks of payment increases before they take out mortgage loans with variable rates or payments, such as adjustable rate mortgages. Lenders would need to provide details to borrowers about maximum interest rates and payments they would need to make during the first five years of their adjustable-rate mortgage, as well as a "worst case" scenario figures. Based on this provision, lenders would also need to explain to borrowers that they can't avoid hikes in payments by refinancing their loans.

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