Skip to content

Say Bye Bye to Mortgage Loans

July 15, 2008

WASHINGTON (Associated Press) – The Federal Reserve has adopted a new plan intended to curb shady lending practices that sent home foreclosure rates to record highs.

The plan will:
*prevent loans made without documentation of borrower’s income;
*require lenders to escrow money to pay taxes and insurance for risky borrowers;
*limit — and, in some cases, ban — prepayment penalties;
*prohibit lenders from making a loan without considering a borrower’s ability to repay a home loan from sources other than the home’s value;
*require mortgage advertising to contain information about rates, monthly payments and other features of the loan;
*require that lenders credit a mortgage payment to a homeowner’s account on the day it is received; and
*forbid brokers and others from “coercing or encouraging” an appraiser to misrepresent the value of a home.

Most of the rules take effect Oct. 1. Escrow requirements will take effect April 1, 2010.
More information is available on the Federal Reserve Board’s website.

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: