State Regulators Mull Guidance on 'Exotics'

State regulators are working on nontraditional mortgage guidance for state-licensed mortgage bankers and brokers, and they want to be consistent with federal guidelines on originating interest-only and payment-option ARMs.Federal banking regulators issued underwriting guidance Sept. 29 for federally insured banks and thrifts. Now the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators want to issue similar guidance in the next few weeks, according to CSBS vice president Michael Stevens. Mr. Stevens noted that the CSBS raised some issues about the strict underwriting requirements on option ARMs during the comment period on the federal guidance. "At this point in time, we think that it is important to have consistent guidance across all the financial providers," Mr. Stevens said.