Monday, July 14, 2008

Day Late, Dollar Short

NEW YORK ( -- The Federal Reserve unanimously approved new mortgage lending rules Monday in a crackdown on shady practices - particularly those involving subprime loans made to borrowers with weak credit.

The agency made several substantial revisions to the proposed regulations it unveiled in December. Many of the changes acknowledged consumer advocates' concerns that the rules still contained too many loopholes that would allow shady lending practices to continue.

While not admitting that Alan Greenspan and his bunch, with the wholehearted complicity of Shrub and company, totally ignored their fiscal responsibility over the last 10 years or so CNN is reporting that (and this is really amazing) the Fed is tightening the rules on mortgage lenders. Talk about shutting the barn door!
Look at these revolutionary ideas being spouted by the Fed:

The new rules governing "higher-priced," or subprime, loans;
  • Prohibit creditors from extending credit without regard to a consumer's ability to repay the loan from income and assets other than the home's value. The lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan.
  • Require creditors to verify income and assets they rely upon to determine repayment ability
  • Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years.
  • Require creditors to establish escrow account for property taxes and homeowner's insurance. This rule will be phased in during 2010.
How revolutionary! Wait there's more:

Additional rules will apply to all mortgages, regardless of rate.

  • Creditors and mortgage brokers cannot coerce a real estate appraiser to misstate a home's value.
  • Companies that service mortgage loans are prohibited from engaging in certain practices, such as pyramiding late fees. Also, they must credit consumers' loan payments as of the date of receipt and provide a payoff statement within a reasonable time of request.
  • Creditors must provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan, including home improvement loans or refinancings. Currently, these estimates are only required for home-purchase loans. Consumers cannot be charged any fee until after they receive the early disclosures, except a reasonable fee for obtaining the consumer's credit history.
  • In advertisements, companies must include additional information about rates, monthly payments and loan features. The rule also bans seven deceptive practices, such as saying a rate is fixed when it can change.
Don't you feel better now that you know your government is on top of the situation before it turns into a crisis? Assholes!
Oh! and this whole financial crisis is in your mind. Get real!

No comments: