Fed to unveil plan to curb shady home lending practices

By: The Associated Press
By: The Associated Press

A Federal Reserve plan being unveiled today would give people taking out home mortgages new protections against shady lending practices.

The Fed is considering limits on penalties lenders can place on subprime borrowers who pay their loans off early. It's also looking at forcing lenders to make sure subprime borrowers set aside money to pay for taxes and insurance.

Loans that don't require proof of a borrower's income could be limited or banned.

And there could be new standards for how repay ability is gauged.

Fed policymakers also will look into improving financial disclosures so people better understand the terms and conditions of their mortgages. It will consider ways to crack down on misleading mortgage advertising.

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