The Board's Truth in Lending regulations require creditors to provide consumers with disclosures about the loan terms, including a schedule of payments. For interest-only and payment option ARMs, the payment schedule shows consumers how their payments will increase to include amortization of the principal.
The proposed interagency guidance includes recommended practices that describe how institutions can use their promotional materials to provide information about the features and risks of these products, especially the risk of payment shock. For example, the guidance recommends that institutions inform consumers about the maximum monthly payment they could be required to pay once interest rate caps and negative-amortization caps have been reached.