[Federal Register Volume 71, Number 59 (Tuesday, March 28, 2006)]
[Notices]
[Pages 15417-15418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-4439]



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FEDERAL TRADE COMMISSION


Public Workshop: Protecting Consumers in the New Mortgage 
Marketplace

AGENCY: Federal Trade Commission (``FTC'' or the ``Commission'').

ACTION: Notice Announcing Public Workshop and Requesting Participation.

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SUMMARY: The FTC is planning to host a public workshop, Protecting 
Consumers in the New Mortgage Marketplace. The workshop will explore 
consumer protection issues arising from the emergence of 
``nontraditional'' or ``alternative'' mortgage products in the United 
States residential mortgage marketplace. The workshop will provide an 
opportunity for government regulators, industry participants, consumer 
advocates, and other interested parties to discuss the impact of these 
products on consumers and the marketplace.
    The event is open to the public and there is no fee for attendance. 
For admittance to the workshop, all attendees will be required to show 
a valid form of photo identification, such as a driver's license.
    Additional information about the workshop will be posted on the 
FTC's Web site at http://www.ftc.gov/bcp/workshops/mortgage/index.html.
    Date and Location: The workshop will be held on May 24, 2006, from 
8:30 a.m. to 5:30 p.m., at the Federal Trade Commission's Satellite 
Building Conference Center located at 601 New Jersey Avenue, NW., 
Washington, DC.
    Requests to Participate as Workshop Panelists: FTC staff will 
identify and invite individuals with relevant expertise to participate 
as panelists. In addition, the FTC staff may invite other persons to 
participate as panelists who submit requests in response to this 
Federal Register notice. Requests to participate as panelists in the 
workshop must be received on or before Wednesday, April 12, 2006. 
Persons filing requests to participate as panelists will be notified 
whether they have been invited on or before Wednesday, April 26, 2006. 
For further instructions, please see the ``Requests to Participate as 
Workshop Panelists'' section under SUPPLEMENTARY INFORMATION below.
    Workshop Agenda: Additional information about the workshop will be 
posted on the FTC's Web site at http://www.ftc.gov/bcp/workshops/mortgage/index.html. An agenda will be posted there in advance of the 
workshop.

FOR FURTHER INFORMATION CONTACT: Julie Bush, (202) 326-3608, or Delores 
Thompson, (202) 326-2264, FTC, Bureau of Consumer Protection. The FTC 
staff contacts can be reached by e-mail at: [email protected], 
and by mail or overnight delivery at: Federal Trade Commission, 601 New 
Jersey Avenue, NW., Mail Stop NJ-3158, Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

Background

    As housing prices throughout the United States have soared in 
recent years, a variety of alternative mortgage products have grown 
increasingly prevalent in the mortgage marketplace. Among the most 
significant products are ``interest-only'' loans and payment option 
adjustable rate mortgage (ARM) loans (or ``pick-a-payment'' loans). The 
proportion of new mortgages consisting of interest-only and pick-a-
payment loans rose dramatically over the last few years. In 2000, such 
loans made up less than one percent of the home mortgage market. By 
2005, they reportedly comprised as much as fifty percent of all new 
mortgage loans.
    These mortgage products may provide benefits for many consumers. 
Consumers may gain the ability to purchase homes at prices they could 
not afford using traditional thirty-year, fixed rate mortgages, because 
the minimum monthly payments required during the initial periods of 
these loan products are much lower. Moreover, these mortgage products 
may be especially well suited for certain consumers, such as those with 
an uneven pattern of income or those anticipating a rise in income.
    These mortgage products may also present unexpected risks for 
consumers. Consumers may not adequately understand that such mortgages 
could result in ``payment shock,'' when minimum monthly payment amounts 
jump by as much as 100% upon expiration of a loan's initial period. 
They also may not understand that some of these loans may yield 
negative amortization, i.e., a rise in the loan balance because 
mortgage payments are less than the interest due. Additionally, because 
these products permit borrowers to defer repayment of principal, 
borrowers build no equity except to the extent that their homes 
appreciate in value. Therefore, such loans may be particularly risky in 
the face of changing market conditions.

Workshop Goals

    The workshop will focus on the consumer protection issues that 
arise in connection with the prevalence of nontraditional mortgage 
products. Specifically, the FTC will explore various aspects of the 
current residential mortgage marketplace, including how these mortgage 
products have evolved, the benefits and risks they pose for consumers, 
how market forces shape the prevalence of particular mortgage products, 
and current consumer understanding of the terms, features, risks, and 
benefits of these loans. Among the many issues the workshop may address 
are:
     What are the mortgage product alternatives offered today? 
Who are the typical borrowers for each product type? What are the 
trends in this new marketplace?
     What are the benefits and risks to consumers of products 
such as interest-only and pick-a-payment loans? Are consumers aware of 
the risks and benefits?
     To what extent are such loans marketed or made to low-
income consumers or consumers with low credit scores? Do loans made to 
such consumers differ in important ways from those made to consumers 
with higher incomes or better credit scores?
     Why have these products become so prevalent in recent 
years? What are the roles of lenders, brokers, government-sponsored 
entities, and secondary market investors in determining which loan 
products are offered?
     How well does the current regulatory framework address 
these loan products?
     How well do consumers understand the terms and features of 
these loans? What do they understand about the risks, such as payment 
shock or negative amortization?
     How significant is the issue of payment shock? How will it 
affect the marketplace in the coming years?
     How can consumers who hold these loans best prepare for, 
or avoid, payment shock?
     How can lenders, loan holders, servicers, or others 
participate in planning and developing solutions for the consumers who 
now hold these loans?
     What are best practices for consumers, lenders, and other 
participants in the loan marketplace?
     What is the FTC's role in protecting consumers in this new 
mortgage marketplace?

Requests To Participate as Workshop Panelists

    The FTC staff will identify and invite individuals with relevant 
expertise to participate as panelists. In addition, the FTC staff may 
invite other persons to participate as panelists who submit requests in 
response to this Federal Register notice.

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    Parties seeking to nominate themselves as potential panelists in 
the workshop must notify the FTC in writing of their interest in 
participating on or before Wednesday, April 12, 2006. Requests to 
participate as workshop panelists should refer to ``Mortgage Workshop--
Panelist Participation Request.'' A request to participate filed in 
paper form should include this reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Mortgage Workshop, c/o Julie Bush, FTC, 601 New Jersey Avenue, NW., 
Mail Stop NJ-3158, Washington, DC 20580. If the request to participate 
contains any material for which confidential treatment is requested, it 
must be filed in paper (rather than electronic) form, and the first 
page of the document must be clearly labeled ``Confidential.'' \1\ The 
FTC prefers that any request to participate filed in paper form be sent 
by courier or overnight service, if possible, because U.S. postal mail 
in the Washington area is subject to delay due to heightened security 
precautions. Please include an original and two copies of each document 
submitted in paper form.
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The request to 
participate must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the request 
to participate to be withheld from the public record. The request 
for confidential treatment will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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    In the alternative, parties may e-mail requests to participate as 
workshop panelists (except requests containing any confidential 
material) to [email protected] and should caption them: 
``Mortgage Workshop--Panelist Participation Request.''
    Requests to participate as workshop panelists should include the 
following information:
    (1) A brief biographical description, including name and 
affiliation;
    (2) A statement setting forth the potential panelist's expertise in 
or knowledge of one or more issues likely to be addressed by the 
workshop;
    (3) A list of the topic(s) that the potential panelist would like 
to address, and a one-paragraph summary of the potential panelist's 
unique perspective or knowledge of each such topic; and
    (4) Contact information, including a daytime telephone number, 
facsimile number, and e-mail address (if available).
    Parties filing requests to participate as workshop panelists will 
be notified whether they have been invited on or before Wednesday, 
April 26, 2006.
    The FTC Act and other laws the Commission administers permit the 
collection of requests to participate as workshop panelists, to 
consider and use in this proceeding as appropriate. More information, 
including routine uses permitted by the Privacy Act, may be found in 
the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy/htm.

General Participation

    The event is open to the public and there is no fee for attendance. 
For admittance to the workshop, all attendees will be required to show 
a valid form of photo identification, such as a driver's license.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E6-4439 Filed 3-27-06; 8:45 am]
BILLING CODE 6750-01-P