Lending Practices More Tightly Regulated by the Federal Reserve
Today, the Federal Reserve took a stab at reducing the probability of another mortgage crisis like the one we are currently experiencing. The move is based on the fact that, while there were many potential causes of this situation, the major one seems to be deceptive lending practices.
The standards for subprime or “higher risk” lending is not much more strict. Lenders can no longer rely on borrowers simply stating their income, and prepayment penalties are outlawed except in certain situations. Other deceptive fees and penalties are no longer allowed either. These new regulations take affect in late 2009.
