A Growing Chorus On Risky Mortgages

Agencies Seek to Curtail Subprime Home Loans

By Nancy Trejos, Washington Post Staff Writer
Saturday, March 3, 2007; Page D01

Federal banking regulators yesterday called on lenders to tighten their standards for issuing nontraditional home loans.

The guidelines, proposed by the Federal Reserve and four other federal regulatory agencies, address loans known as "subprime" mortgages that cater to borrowers with blemished credit histories or low incomes. Such mortgages became popular during the housing boom that began to wane in 2005, allowing people who would otherwise not have qualified for conventional loans to buy homes. However, concern has grown that rising delinquency rates on such mortgages threaten both lenders and borrowers.