Shady lenders beware

Federal Reserve is embarking on a new project to protect borrowers from shady lending processes. Federal Reserve means some business here. It wants to protect all the borrowers, even the riskiest ones. This move has come into picture as the housing and credit problems creating a nationwide panic.

Fed may come up with some rules soon regarding loans and lenders. These rules will be applicable to all the lenders including banks and the brokers.

The following changes are expected from this move by Fed –

• If you are a spotty credit holder or low income borrower, lenders will not be able to penalize you if you repay off your loan early.
• Lenders will need to make sure that the subprime borrowers keep money aside for taxes and insurance.
• More and more financial information will be available to the borrowers, so that they can understand their loans well.
• The loans that are available without income proof will be restricted by the new rules.
  Abuses in the advertising for mortgages will not be permitted
• The lenders will be examined to find out whether he/she examined the borrower’s ability to repay a loan.

Various sections have various opinion about the proposed change but it will definitely bring in some cushioning for the borrowers. The house has passed a similar legislation which also includes some of the actions prescribed by FED. This is a step in time for the homeowners who are in a bad condition in the increasing record foreclosure deal. These steps may get them some relief soon. What do you think?