In Reversal, Fed Approves Plan to Curb Risky Lending - New York Times

And who says the Fed is not reactionary....!!!

The reality is that by sanitizing the system, i.e. as leverage is reduced at all levels of the economy, the US will inevitably face a very harsh deflationary envirionment.


In Reversal, Fed Approves Plan to Curb Risky Lending - New York Times

The Federal Reserve, acknowledging that home mortgage lenders aggressively sold deceptive loans to borrowers who had little chance of repaying them, proposed a broad set of restrictions Tuesday on exotic mortgages and high-cost loans for people with weak credit.

The new rules would force mortgage companies to show that customers can realistically afford their mortgages. They would also require lenders to disclose the hidden sales fees often rolled into interest payments, and they would prohibit certain types of advertising.

Borrowers would be able to sue their lenders if they violated the new rules, though home buyers would be allowed to seek only a limited amount in compensation.