Pamphlet Spells Out Risks of 'Exotic' Loans

Federal banking regulators last month issued a strongly worded warning to lenders about the dangers of nontraditional, or "exotic," mortgages, telling them they feared that borrowers did not understand the implications of the loans. Now regulators have issued a similar warning directly to consumers in a pamphlet that explains how these loans work, including a glossary of terms that represent a new vocabulary for borrowers accustomed to traditional lending. [K. Downey, The Washington Post, October 21, 2006]