Related Consumer Finance Programs - The following sub-directories of companies offer a wide variety of financial programs to assist you with the management of your finances. Consolidate debt with a consolidation loan or use a debt counseling service or mortgage refinance for help with the consolidation of your charge card debt and other monthly payments.

• Personal Loan Company - Need a smaller loan for the consolidation of your credit cards? Personal loan credit is typically unsecured and does not require you to provide security in the form of your assets, such as your car or other personal assets.
• Debt Consolidation Settlement - High credit card balances making your monthly payments impossible to meet? The negotiation of your outstanding bills with your creditors may be a good debt solution for you. Educate yourself on your options and compare available programs.
• Debt Management Credit Counseling - Having trouble keeping up with your monthly credit payments? Compare debt management companies in this online list that can try amd help you get a grip on your personal financial situation.

The New Climate for Mortgage Borrowers

What's Happened and Why

First, a few words about how conditions have changed and why. From about 2000 through 2005, interest rates were low and home values soared in many parts of the country. Many lenders met the strong demand for mortgages by promoting nontraditional mortgages (NTMs), which are characterized by low monthly payments in the early years in exchange for the deferred repayment of principal and/or interest. In addition, lenders offered "hybrid" adjustable-rate mortgages (ARMs), which have a low fixed-interest rate for the first two or three years, after which the interest rate periodically adjusts and mortgage payments generally increase.

Although NTMs and hybrid ARMs can be appropriate for some borrowers, such as people who are likely to have increasing income or to move in a few years, for many other consumers these loans can result in unaffordable monthly payments as the deferred principal becomes due and higher interest rates apply.

A large number of borrowers used NTMs or hybrid ARMs to buy houses they otherwise could not afford. It now appears that many of them may not have fully understood the risks of these products, and lenders did not adequately evaluate their ability to make higher payments over the life of the loan. Some lenders also provided NTMs and hybrid ARMs to "subprime" borrowers — individuals with damaged or limited credit histories — on the assumption that real estate prices would continue to rise and would protect the lenders if the borrowers defaulted on the loans.

Starting in 2006, however, home values began to flatten or even fall. As interest rates on NTMs and hybrid ARMs reset, borrowers faced significantly higher and even unaffordable monthly payments. Borrowers who had planned to refinance to obtain lower payments found it difficult due to the declining housing market. Many people whose loans have reset, particularly those in the subprime market, have already missed payments, and that puts them at risk of losing their homes.

Now, lenders have tightened their standards for all borrowers. In general, they want to lend to applicants with a good credit record, the ability to make a reasonable downpayment, and fully-documented income to repay the loan. Lenders also are trying to better match borrowers with loans they can afford for the next 15 or 30 years, not just for the short term. So, how can mortgage borrowers find a loan that works for them?

FDIC Consumer News is published by the Federal Deposit Insurance Corporation

FDIC Consumer News is produced quarterly by the FDIC Office of Public Affairs in cooperation with other Divisions and Offices. It is intended to present information in a nontechnical way and is not intended to be a legal interpretation of FDIC or other government regulations and policies. Mention of a product, service or company does not constitute an endorsement.

Find current and past issues of FDIC Consumer News at http://www.fdic.gov/consumernews. Refer to this same index to locate the issues that are specially formatted for being reprinted in any quantity.

To receive an e-mail notice about each new issue of FDIC Consumer News posted on the FDIC Web site, with links to stories, follow instructions posted at www.fdic.gov/about/subscriptions/index.html.

Last updated on 11/08/2007

Make the correct decisions when shopping for banking, debt consolidation and related financial services. Educate yourself!

The Debt Consolidation Loan Directory has a growing library of free informative / educational financial resources for consumers shopping for many types of services related to the management of your money, such as consolidating credit card debts, fraud alerts and car insurance. There is no better way to make decisions regarding the management of your personal finances than to read and understand how they work. Please feel free to visit our consumer resource library for more information.

• Cell Phone Banking - New cell phones are constantly evolving and becoming more sophisticated. This includes adding the capability of handling online banking through your phone. This FDIC article discusses some of the possibilities and precautions you should take when using your phone for banking purposes.
• How to Protect Yourself with FDIC Insurance - Read up on what qualifications are necessary and how to determine if your deposits are covered by FDIC insurance.
• Direct Deposit Safer than Checks? - The US Treasury Department reports that a majority of surveyed consumers mistakenly believe that paper checks are safer than direct deposit.
• Consider the Fees! - Learn what to look for and examine the details of each banking account offer for possible fees, such as: inactivity, minimum balance and ATM withdrawal fees.

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