Fed proposes new mortgage protections

Patrick Rucker
Reuters
Tuesday December 18, 2007

The Federal Reserve Board on Tuesday proposed new protections for high-cost mortgage borrowers to avoid a repeat of the loose lending standards that have put many Americans at risk of losing their homes.

U.S. lenders would have to determine borrowers can afford a mortgage before making the loan, according to the Fed plan.

The proposed rules also would promise that borrowers will get details on their brokers' compensation and be billed monthly for annual charges like property tax and insurance.

The new proposed regulations are now open for 90 days of public comment before becoming final.

"Unfair and deceptive acts and practices have hurt not just borrowers and their families, but entire communities and, indeed, the economy as a whole," Fed Chairman Ben Bernanke said at a board meeting on the proposals.

The Fed offered sweeping new standards for new home lending as the nation faces a spike of foreclosures and failing home loans.

Full article here.

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