This bulletin addresses risks associated with certain subprime mortgage products and lending practices and mirrors the guidance offered by the federal banking agencies. In particular, the Department is concerned about the growing use of adjustable rate mortgage (ARM) products that provide low initial payments based on a fixed introductory rate that expires after a short period, and then adjusts to a variable rate plus a margin for the remaining term of the loan. These products could result in payment shock to the borrower. The bulletin identifies many important standards for subprime lending. The bulletin includes credit risk characteristics of loans to subprime borrowers. The bulletin also identifies some typical elements of predatory lending.