With foreclosures at an all time high, the subprime market has been the target of critisim and change with lenders going out of business, and stricter underwriting guidelines. Tomorrow the Federal Reserve is seeking to make changes in the sub prime market. Here are some of the proposals:
• barring lenders from penalizing subprime borrowers – those with spotty credit or low incomes – who pay their loans off early.
• forcing lenders to make sure that borrowers, especially subprime borrowers, set aside money to pay for taxes and insurance.
• restricting loans that do not require proof of a borrower’s income.
• examining lenders’ failure, in some cases, to consider a borrower’s ability to repay a home loan.
• improving financial disclosure so people better understand the terms and conditions of their mortgages and get this information when it is most useful.
• curtailing abuses in mortgage advertising.
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