Federal Reserve sides with borrowers – no more penalty for early mortgage payments, no more no-doc loans, insurance and property taxes built into mortgages
Kirsten McLauren
Jul. 9, 2008

The Federal Reserve has finally made shady loans impossible. The new rules would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower's income. It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower's ability to repay a home loan from sources other than the home's value.

Fed provides the squeezed Wall Street firms more time to tap the central bank's emergency loan program. This may be the first round of cracking down on a range of shady lending practices. Fed is also looking at ways to provide relief to the victim homeowners who were misrepresented the fact on loans by the mortgage brokers and bankers.

The borrowers may have some relief at sight. The bigger question is that if borrowers can get special relief for cases where the lenders fooled them.

Federal Reserve sides with borrowers – no more penalty for early mortgage payments, no more no-doc loans, insurance and property taxes built into mortgages
Kirsten McLauren
The Federal Reserve has finally made shady loans impossible.
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