The Federal Reserve is introducing its new mortgage protection plan today to help bailout struggling borrowers.
The rules it’s proposing are particularly aimed at protecting those who might find subprime loans their only alternative because of low income or poor credit.
The Fed proposes these regulations:
- Barring or restricting lenders from penalizing subprime borrowers who pay their loans off early.
- Forcing lenders to make sure that borrowers, especially subprime ones, set aside money to pay for taxes and insurance.
- Barring or limiting loans that do not require proof of a borrower's income.
- Setting new standards for how lenders determine a borrower's ability to repay a home loan.
The plan, if ultimately adopted, offers Federal Reserve Chairman Ben Bernanke, who took over the helm in February 2006, an important opportunity to put his imprint on the Fed's regulatory powers.
Source: The Associated Press, Jeannine Aversa (12/18/07)