[Federal Register Volume 71, Number 250 (Friday, December 29, 2006)]
[Notices]
[Pages 78437-78438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-22316]


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FEDERAL RESERVE SYSTEM


Consumer Handbook on Adjustable Rate Mortgages

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice of availability of handbook on Adjustable Rate 
Mortgages.

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SUMMARY: This notice announces the availability of the revised Consumer 
Handbook on Adjustable Rate Mortgages by the Board of Governors of the 
Federal Reserve System (the Board) and the Office of Thrift Supervision 
(the OTS). The Consumer Handbook on Adjustable Rate Mortgages (the 
CHARM booklet) provides information to consumers about the features and 
risks of adjustable rate mortgage loans. Under Regulation Z (which 
implements the Truth in Lending Act), creditors must provide a copy of 
the CHARM booklet published by the Board and the OTS, or a suitable 
substitute, to consumers with every application for an adjustable rate 
mortgage loan. The CHARM booklet published by the Board and the OTS 
today replaces the CHARM booklet published in 1987 and most recently 
reprinted May 2005.

DATES: Creditors may immediately begin using the revised CHARM booklet 
(or a suitable substitute) to fulfill the requirement in Regulation Z. 
Beginning on October 1, 2007, creditors must use the CHARM booklet 
published today or a suitable substitute to comply with Regulation Z.

FOR FURTHER INFORMATION CONTACT: Kathleen C. Ryan, Counsel, Division of 
Consumer and Community Affairs, Board of Governors of the Federal 
Reserve System, Washington, DC 20551, at (202) 452-2412 or (202) 452-
3667. For users of Telecommunications Device for the Deaf (TDD) only, 
contact (202) 263-4869.
    How to Obtain Copies: The CHARM booklet is available on the 
Internet at http://www.federalreserve.gov/pubs/arms/arms_english.htm. 
Single copies of the brochure are available free of charge by mailing a 
request to: Publications, Mail Stop 127, Federal Reserve Board, 20th 
and C Streets, NW., Washington, DC 20551, or by calling 202-452-3245.

SUPPLEMENTARY INFORMATION: The Board and the OTS (the agencies) 
developed the CHARM booklet in 1987 to educate consumers about the 
features and risks associated with adjustable rate mortgages. Since 
1987, adjustable rate mortgage products have changed, and recently 
``interest only'' and ``payment option'' features have increasingly 
been added to adjustable rate mortgage products. Interest only and 
payment option ARMs--often referred to as ``nontraditional mortgage 
products''--allow borrowers to defer payment of principal and, 
sometimes, interest. To try to ensure that consumers understand

[[Page 78438]]

the risks for such nontraditional ARMs, the agencies have substantially 
revised the CHARM booklet to include discussions of the features and 
risks of these newer products. Key changes to the CHARM booklet include 
new information about interest only ARMs, payment option ARMs, and 
``hybrid'' ARMs that include an initial fixed rate period with a longer 
adjustable rate period. The shopping worksheet has been expanded to 
allow consumers to compare the terms of more products. Examples 
throughout the booklet have been updated to reflect current interest 
rates and mortgage amounts. The booklet also now briefly explains what 
is involved in a ``stated income'' or ``low doc'' loan. To help 
consumers navigate through the booklet, the agencies have added a 
summary of ``core messages'' at the beginning of the booklet.
    Creditors may at their option immediately begin using the revised 
CHARM booklet or suitable substitute to comply with the requirements in 
12 CFR 226.19(b)(1). The agencies understand, however, that some 
creditors may wish to use their existing stock of CHARM booklets. 
Therefore, creditors may continue to use their existing stock of CHARM 
booklets until October 1, 2007; beginning on October 1, 2007, creditors 
must use the revised CHARM booklet or suitable substitute to comply 
with Regulation Z.

    By order of the Board of Governors of the Federal Reserve 
System, December 22, 2006.
Jennifer J. Johnson,
Secretary of the Board.
 [FR Doc. E6-22316 Filed 12-28-06; 8:45 am]
BILLING CODE 6210-01-P