Dec. 20 (Bloomberg) -- The Federal Reserve and other government agencies proposed tighter lending standards on mortgages today, saying unconventional loans warrant strong risk management.

The government regulators said borrowers need to have sufficient information to understand the risks of these loans. The guidance affects ``interest-only'' and ``payment-option'' mortgages. The guidelines recommend that lenders base loans on the borrower's ability to repay the money even after low-rate introductory offers.

The agencies include the Fed, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision and the National Credit Union Administration.

To contact the reporter on this story: Joe Richter at jrichter1@bloomberg.net.

Last Updated: December 20, 2005 13:29 EST