The New Lending Rules

Until now, states have taken the lead role with rules on lending.

On Oct. 1, the Federal Reserve’s new federal rules come into effect.

Those with poor credit currently pay up to two interest points more.

The new rules force lenders to have adequate documentation of income. Liar loans have basically fallen off the map anyway since the subprime crisis.

The New York Times reports:

Mr. King said another shortcoming in the new regulations is that they do not cover option ARMs, adjustable-rate mortgages on which borrowers can choose from several monthly payments options during the loan’s early years. (Borrowers often chose the minimum-payment option, which usually didn’t even cover the loan’s monthly interest charge.)

JIM PAIR, the president of the National Association of Mortgage Brokers, which is based in McLean, Va., says he is pleased that the new rules do not enact a “suitability standard,” whereby loan officers are legally responsible for offering loans that best suit the borrower’s circumstances.

But Mr. Pair said he was concerned that the rules would greatly curtail loan alternatives, especially for those who might qualify only for subprime mortgages.

“We’re going to have some consumers who are not able to purchase a home because of this, since most lenders don’t want to do high-cost loans,” he said. “There’s too much potential liability for them.”

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (, he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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