Fed Cracks Down on Mortgage Lenders

By Joshua Philipp
Joshua Philipp
Joshua Philipp
Joshua Philipp is an award-winning investigative reporter with The Epoch Times and host of EpochTV's "Crossroads" program. He is a recognized expert on unrestricted warfare, asymmetrical hybrid warfare, subversion, and historical perspectives on today’s issues. His 10-plus years of research and investigations on the Chinese Communist Party, subversion, and related topics give him unique insight into the global threat and political landscape.
July 14, 2008 Updated: October 1, 2015

BREADLINE: Hundreds of nervous customers wait in line to get into an IndyMac Bank, open for the first time since the July 11 federal government takeover of the thrift on July 14, 2008 in Pasadena, California. IndyMac, which was already in trouble because  (David McNew/Getty Images)
BREADLINE: Hundreds of nervous customers wait in line to get into an IndyMac Bank, open for the first time since the July 11 federal government takeover of the thrift on July 14, 2008 in Pasadena, California. IndyMac, which was already in trouble because (David McNew/Getty Images)
NEW YORK—New mortgage lending rules will hopefully reduce the number of foreclosures. On Monday, the U.S. Federal Reserve approved new rules for mortgage lenders, targeting subprime loans and other potentially dishonest practices.

Subprime loans are often a cause of problems for borrowers, as some lenders intentionally target those who are outside the necessary credit range of the loans. Other sly methods are also occasionally used to dupe unsuspecting borrowers, such as mortgages with hidden terms and fees.

A December 2007 FBI press release on subprime loans states, “These scams—which include plenty of shenanigans with mortgages and subprime loans—are costing the nation tens of billions of dollars a year.”

“Greed is definitely not good for our economy right now,” said Ken Kaiser, a investigator at the FBI. “It’s hurting homeowners. It’s hurting honest businesses. And it’s hurting investors and markets around the world.”

The Fed’s new regulations will ban practices such as claiming to offer a fixed rate when charging exorbitant miscellaneous fees. Creditors will be required to base loans off of the borrower’s income and assets outside of the actual home of the borrower, while determining whether or not the borrower would be capable of repaying the loan.

The creditors will also be required to give a payment schedule within three days of giving a mortgage loan, and borrowers cannot be charged any fees until they receive all the information.

With nearly all of the new rules set to take effect on October 1, 2009—more than a year from today—there are some who wonder how effective they will be.

The regulations were originally proposed last December, yet many changes were made after the Fed received a large number of concerns expressed by consumers and companies about possible loopholes.

Joshua Philipp is an award-winning investigative reporter with The Epoch Times and host of EpochTV's "Crossroads" program. He is a recognized expert on unrestricted warfare, asymmetrical hybrid warfare, subversion, and historical perspectives on today’s issues. His 10-plus years of research and investigations on the Chinese Communist Party, subversion, and related topics give him unique insight into the global threat and political landscape.