Several Senate Banking Committee members are urging regulators to clarify whether a specific type of hybrid loan is included in guidance issued Sept. 29 on exotic loan products.
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The lawmakers said the agencies must act quickly to ensure the guidance applies to so-called 2/28 loans, 30-year mortgages with a fixed rate for two years that adjusts higher for the rest of the term.
"Many subprime borrowers simply cannot afford these new, significantly higher payments and will be forced to refinance the loans or fall into default," wrote six panel members, including incoming Chairman Christopher Dodd, D-Conn.
