Guidance To Vermont Licensees On Nontraditional Mortgage Products

Bulletin
Monday, November 27, 2006
Banking Bulletin #29

This guidance mirrors the guidance offered by the federal banking agencies on nontraditional mortgage products.  This bulletin clarifies how mortgage brokers and licensed lenders can offer nontraditional mortgage products in a way that clearly discloses the risks that borrowers may assume.  These products, referred to variously as "nontraditional," "alternative," or "exotic" mortgage loans, include, among other loans, interest-only mortgages and payment option adjustable-rate mortgages.  It includes guidance on loan terms and underwriting standards, risk management practices, consumer protection issues, and recommended practices.

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