There has been a surge in delinquencies and foreclosures, particularly, as I mentioned in my testimony, in sub-prime lending with variable rates, rates that adjust with short-term interest rates.
And that is a concern to us. We certainly have been following it carefully. It's obviously very bad for those who borrowed on those circumstances, and it's not good for the lenders either, who are taking losses. We have tried, together with the other banking agencies, to address some of these concerns. We recently issued a guidance on nontraditional mortgages, which had three major themes.
The first was that lenders should underwrite properly, that is they should make sure that borrowers had the financial capacity to pay even when rates go up, and not simply underwrite based on the initial rate - deal with the possible payment shock.
Secondly, that lenders should give a full disclosure and make sure that people understand the terms of the mortgages they're getting into. And I would add that the Federal Reserve provides a number of documents, booklets and descriptions that are required to be included along with mortgage applications for adjustable rate mortgages.
And thirdly - and this is more on the issue of the lenders rather than the borrowers - that lenders should make sure that they appropriately risk manage these exotic mortgages, which we don't have much experience with and so some caution is needed, as we're now seeing, in managing them.