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Fed makes changes to ARM handbook for consumers
December 28, 2006

A revised consumer handbook on adjustable-rate mortgages (known as the CHARM booklet) is now available, the Federal Reserve Board and the Office of Thrift Supervision announced Tuesday. The new booklet, which provides information to consumers about the features and risks of ARMs, has been substantially revised to include discussion about nontraditional “interest-only” and “payment-option” mortgages.

“The revised booklet describes how these loans typically work, showing how much (and how often) monthly payments could increase, and how the loan balance could increase if minimum monthly payments are made,” the Federal Reserve Board said in a joint press release.

Creditors must provide a copy of the CHARM booklet, or a suitable substitute, to consumers with every application for an adjustable rate mortgage loan in order to comply with the Board’s Regulation Z and the Truth in Lending Act. Lenders may begin immediately using the revised booklet, but are permitted to use the old CHARM booklets until Oct. 1, 2007.

The revised booklet is available online by clicking here.

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