Federal Reserve Proposes New Rules Designed to Curb Deceptive Home Lending Practices
By Jonathan Ginsberg on Dec 19, 2007 in Interest and Fees, RESPA
The Atlanta Journal-Constitution reports today that the Federal Reserve has released a proposal for new rules that impose “tough new restrictions meant to curb unfair and deceptive home-lending practices and prevent a recurrence of this year’s meltdown in subprime mortgages.”
The Federal Reserve’s press release describes these proposed rules in more detail and invites public comment. Among the highlights of the Fed’s proposals are: 1) the creation of a category called “higher priced mortgages” (to include subprime loans) that are subject to extensive disclosure notice rules and that impose increased underwriting restrictions on lenders, and 2) curbs on lending practices that are most likely to result in abuse – such as advertising disclosure rules and pyramiding late fees.
It will be interesting to see the reaction of the mortgage broker community to the disclosure requirements of these proposed rules. Note that these rules are only in the proposal stage right now and have not yet gone into effect. I encourage you to take the time to read the Federal Reserve press release and to submit your comments.
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