Truthmatters
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- May 10, 2007
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Regulators crack down on subprime-lending abuses - MarketWatch
abuse in the subprime mortgage marketplace, federal regulators are cracking down on banks by issuing new rules Friday to make sure borrowers get loans they can actually afford.
The new rules, effective immediately, are for adjustable-rate mortgage products that can cause payment shock. These loans start off with low "teaser" rates that balloon, and end up being more expensive than borrowers initially anticipate.
The new rules call for banks to beef up their disclosures, limit prepayment penalties, limit the use of "stated income" loans, and include a fully indexed, fully amortized qualification for borrowers.
Buyer beware
abuse in the subprime mortgage marketplace, federal regulators are cracking down on banks by issuing new rules Friday to make sure borrowers get loans they can actually afford.
The new rules, effective immediately, are for adjustable-rate mortgage products that can cause payment shock. These loans start off with low "teaser" rates that balloon, and end up being more expensive than borrowers initially anticipate.
The new rules call for banks to beef up their disclosures, limit prepayment penalties, limit the use of "stated income" loans, and include a fully indexed, fully amortized qualification for borrowers.
Buyer beware
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