Federal Reserve adopts new rules from 1st Oct, 2009

Shared by Sara on Wed Sep 30, 2009 2:51 am
Federal Reserve has decided to adopt new rules from October 1st, 2009. Now onwards, mortgage lenders would have to be careful enough before offering high-cost loans to borrowers with weak credit. It has been suggested that the interest rates on these loans would be 1.5% points higher than the average rate for prime mortgage. Most of the consumer advocates have highly praised the changes that the new rules would bring forth. On, the other hand, the mortgage executives are concerned about the fact that the new changes could further dry up the mortgage market. Source: http://www.nytimes.com/2009/09/27/realestate/27mort.html?_r=1

Community Members Opinion

jerry

Joined: 17 Oct 2005

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Posts: 1778
Location: MICHIGAN

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Posted: Wed Sep 30, 2009 6:51 am Post subject:

Hi Sara, It's good to know that the Govt. has finally taken up some substantial measures requiring greater underwriting diligence from lenders offering high-cost loans to bad credit borrowers. It would have been far better if the new regulations were implemented earlier. This could have avoided the sub-prime mortgage crisis the economy is currently struggling with. Anyway, it's better late than never. However, I don't understand why the option ARMs have not been covered by the new regulations. Option ARMs are one of the causes of the rise in the number of foreclosure in recent years. Many homeowners get attracted towards the low teaser rates offered by the option ARM lenders. When the rates adjust, often upwards, after a certain number of years, they get a payment shock and default on their loans. The Govt. should bring in some sort of regulation to control the option ARM lending practices. This will help check the number of foreclosures and defaults and will avoid the possibility of a mortgage crisis in future. Thanks, Jerry

frankmcdowell2000

Joined: 07 Sep 2009

Posts: 57

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Posted: Wed Sep 30, 2009 10:24 am Post subject:

Hi Sara, you are right. it will put negative remark on struggling market. most of the current refinance cases will be considered as high cost loan because of present market scenario. It is a conflict situation. no relief ....

sunnyca2009

Joined: 04 Aug 2009

Posts: 1737

36.13 Dollars($)

Posted: Sun Oct 04, 2009 12:03 pm Post subject:

We need to do things to protectour self from fallign in to the simialr situationwe are in today Some thigns it may nto be good for short term but in the long run, it will make easy for every one


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