In 2005, the National Credit Union Administration (NCUA) discussed increasing risks to mortgage borrowers in Letter to Credit Unions 05-CU-15, Increasing Risks in Mortgage Lending. As discussed in that letter, some residential mortgage borrowers are experiencing mortgage repayment difficulties or “payment shock,” as the interest rates on their mortgages reprice or reset. Some of these borrowers may not have the ability to repay substantially higher payments since they were qualified based on low initial interest rates.

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