Community Dividend

Regulators revise adjustable-rate mortgage handbook

Published March 1, 2007  | March 2007 issue

The Board of Governors of the Federal Reserve System and the Office of Thrift Supervision have released a revised version of the Consumer Handbook on Adjustable-Rate Mortgages. The handbook, known as the CHARM booklet, describes the features and risks of nontraditional mortgage products. It was originally published in 1987 and has been updated periodically to reflect changes in the home mortgage market.

The recent updates recognize the growing popularity of "interest-only" and "payment-option" adjustable-rate mortgage products, which allow borrowers to defer payments of principal and sometimes interest. The revised booklet explains the features of these loans and shows how they could affect a borrower's monthly payment.

Regulation Z, which implements the Truth in Lending Act, requires creditors to provide a copy of the CHARM booklet or a suitable substitute to any customer who applies for an adjustable-rate mortgage. Creditors may continue to distribute their existing stock of CHARM booklets until October 1, 2007. From that date on, they must distribute the new version.

To view the revised CHARM booklet, visit For information on ordering hard copies, visit The booklet is currently available in English only; a Spanish version is forthcoming.