More Information on Mortgages Urged

Federal regulators need to do a better job of explaining to prospective borrowers the workings and potential risks of interest-only and other nontraditional mortgages, congressional investigators said Wednesday.

Nontraditional home loans that once were mostly the domain of the wealthy, especially interest-only mortgages and option adjustable-rate mortgages, have exploded in popularity in recent years as people stretched to buy high-priced homes during the real estate boom.

“Although lenders and certain brokers are required to provide borrowers with written disclosures at loan application and closing, federal standards on these disclosures do not currently require specific information on [alternative mortgage products] that could better help borrowers understand key terms and risks,” the General Accountability Office said.