The National Association of Realtors (NAR) and the Center for Responsible Lending beat the Feds at educating consumers about prime and sub-prime mortgages and produced their own brochures.  Today, as reported on  www.Inman.com, the latest version of a handbook that federally chartered banks must distribute to borrowers who apply for adjustable-rate loans includes sections on "Payment Shock" and Negative Amortization.

The revised "Consumer Handbook on Adjustable Rate Mortgages," issued this week by the Federal Reserve Board and the Office of Thrift Supervision (and also available in Spanish), warns of a scenario that many borrowers in volatile markets are already facing:

"Sometimes home prices rise rapidly, allowing people to quickly build equity in their homes. This can make some people think that even if the rate and payments on their ARM get too high, they can avoid those higher payments by refinancing their loan or, in the worst case, selling their home. It's important to remember that home prices do not always go up quickly--they may increase a little or remain the same, and sometimes they fall. If housing prices fall, your home may not be worth as much as you owe on the mortgage. Also, you may find it difficult to refinance your loan to get a lower monthly payment or rate. Even if home prices stay the same, if your loan lets you make minimum payments (see payment-option ARMs), you may owe your lender more on your mortgage than you could get from selling your home."

For specific mortgage questions or information on qualifying for a mortgage loan, Century 21 Mortgage  or your personal lender can provide answers.