Regulators Begin to feel uncomfortable Apparently bank regulators have issued new guidance to banks about home equity loans, warning them about homeowners borrow too much against their homes. Of course the impact on these practices is almost non existant.

"It's as easy to get these loans now as it was two months ago," said Michael Menatian, president of Sanborn Mortgage, a mortgage broker in West Hartford, Conn. "If anything, people are offering them even more than before."

Apparently guide lines have only been issued without concrete action. Why?

"We don't want to stifle financial innovation," said Steve Fritts, associate director for risk management policy at the Federal Deposit Insurance Corporation. "We have the most vibrant housing and housing-finance market in the world, and there is a lot of innovation. Normally, we think that if consumers have a lot of choice, that's a good thing."

In many ways this is a good thing as it allows competition for a borrowers business. This means a financial windfall for the consumer by tapping the equity in their home.

Led by the comptroller's office, which oversees nationally chartered banks, federal banking regulators published guidance in May that gave lenders more detailed instructions on how to evaluate the risks in home-equity loans.

The move was a warning shot to lenders. The value of home-equity loans shot up 40 percent in 2004, to $398 billion. Almost all of those loans are at adjustable interest rates, which could rise sharply, and many were extended to people who had just borrowed money to buy a house.

If you have a hybird ARM or an ARM it's time to think about refinance.

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  ¶ Regulators Begin to feel uncomfortable