Common sense would tell you to find out if the guy/gal your lending to can pay back. Right? Because of the surge in defaults on high-risk home mortgages Federal bank regulators yesterday asked lenders to exercise caution in making sub-prime loans and closely check and evaluate borrowers’ ability to repay them.

The Federal Reserve advised the other four federal agencies that regulate banks, thrifts and credit unions, comes in an increasingly troubled market for subprime mortgage loans.

Mortgage delinquencies and foreclosures are spiking. People who took out subprime mortgages for a higher-interest rate because of a bad credit record or a low income are considered higher risk.