Fed Approves New Rules For Mortgage Loans … Too Little Too Late
The Federal Reserve approved new rules for home mortgage loans to protect consumers from questionable lending practices. Most of the new rules apply to subprime owner occupied home loans and go into effect 10-1-09.
Two of the best of these new loans are:
The lender must verify the borrower’s income and assets the borrower is relying on to pay the mortgage.
Lenders to escrow property taxes and homeowner’s insurance on subprime loans. This rule will be phased in during 2010.
The requirement to have escrow accounts on sub-prime loans should have been there all along but the lenders did not want the extra work. FHA and VA loans have always required escrow accounts because it addresses the stupidity factor. If you are not smart enough to save a down payment, you are obviously not going to save for your property taxes and insurance when they come due. So your lender has to set up a forced savings account to do it for you.
San Diego California real estate agent
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