The Federal Reserve has tightened mortgage rules with the aim to prevent a repetition of the subprime crisis and protect home buyers. The Fed chairman believes high costs loans have been offered to those who weren't financially fit to manage them and this has resulted in a high rate of delinquency.

As per the new rules,

1. Any lender should not make loans without proof of one's income. He should check for a borrower's ability to repay the loan from his income and assets.


2. Lenders should restrict their practice of charging prepayment penalties.

Let's hope that the new rules will help in consumer protection from frauds and subprime crisis.