The Fed has recently approved a plan that would make mortgage lenders more thoroughly verify that lenders can actually afford the mortgages they take. Additionally, mortgage companies would have to completely reveal any sales fees that were hidden and then rolled into the interest payments. The New York Times reports, “The proposed changes, which do not apply to standard mortgages for borrowers with good credit, stopped short of banning all heavily criticized practices in subprime lending and did not go as far as many consumer groups had sought. But they won praise as worthwhile steps from some industry critics who had long complained that the Federal Reserve under its former chairman, Alan Greenspan, persistently ignored signs of trouble.”
The Fed has taken quite a bit of criticism for the sub-prime mess and this looks to be a step in possibly preventing future problems in this arena.
