Blog Post

Yesterday the Senate voted to ban two high risk lending practices that contributed to the housing bubble. Stated income loans, also referred to as “liar loans,” allowed borrowers to state their income and without any proof or verification. Lenders will now be required to verify a borrower’s income and their ability to repay the loan. The bill also bans lenders from offering mortgage brokers and loan officers bonuses for steering borrowers towards higher interest rates or other conditions that favored the lender. Both of these practices have been blamed for the subprime mortgage crisis. This new legislation is an amendment to a larger financial regulatory reform bill currently working through congress.

Via LA Times, CNN Money, Housing Watch

Posted 13th May 2010 by Sally Forster Jones

Labels: congress financial regulatory reform bill high risk lending housing bubble liar loans mortgage brookers senate stated income loans subprime lending subprime mortgage crisis