by Calculated Risk on 12/09/2005 07:27:00 PM

The WaPo reports: Minimum-Payment Loans Get Maximum Crackdown

Federal financial regulators appear to be on the verge of reining in one of the most popular mortgages in hot housing markets nationwide -- loans that allow 1 percent to 2 percent payment rates leading to "negative amortization."

The author is basing this article on John Dugan's remarks last week (Comptroller of the Currency).

UPDATE: I linked to the wrong speech ... here is the correct one:
For excerpts see: Remarks by John C. Dugan, Comptroller of the Currency

And here is the complete text of Dugan's remarks (pdf).

The bottom line for 2006: Look for tougher standards on popular 1 percent and 2 percent minimum-payment plans, and fewer qualified buyers in high-cost markets where wild appreciation has been sustained in part by reality-bending rate-reduction programs