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New guidance on non-traditional mortgages released.

Article Excerpt
The hot real estate market of recent years has lured some consumers into getting in over their heads with what are known as non-traditional, alternative or exotic mortgages including interest-only mortgages and payment option adjustable rate mortgages (ARMs) that allow borrowers to pay less during an initial period in exchange for higher payments later.

When house sales were hot in many areas of the country, some speculators would purchase a house to "flip" it a short time later, hoping to make thousands in profits. Others purchased more home than they could afford without expecting interest rates to increase. But as the housing market has cooled, and interest rates have gone up, there is concern about the potential fallout.

The Mississippi Department of Banking and Consumer Finance recently adopted new regulatory guidance covering non-traditional mortgages sold by state-licensed entities. The intent of the guidance for the subprime mortgage market is to make sure that risks are disclosed and consumers know what they are getting into when they get a non-traditional mortgage.

"The guidance is intended to...

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