Fed takes steps to curb subprime abuses
The Federal Reserve Board, in a 5-0 vote Dec. 18, 2007, instituted new rules for mortgage lenders aimed at curtailing abuses in the subprime market. The new rules require lenders to demonstrate that their borrowers can realistically afford the mortgages, disclose hidden fees, and prohibit misleading or deceptive advertising. They also force lenders to make sure their subprime borrowers set aside money for taxes and insurance. Borrowers can sue their lenders if these new rules are violated, but with limits on compensation. Subprime loans traditionally go to borrowers with tarnished or spotty credit and low incomes. Many of them are first-time homebuyers. Since 2005, Texas REALTORS® have participated in a training program called United Texas, designed to help first-time homebuyers obtain the best possible mortgage while avoiding the pitfalls of predatory lending. In 2007, United Texas evolved into a larger Affordable Housing Specialist certification, which equips Texas REALTORS® with additional training to better represent the unique needs of Texans who need extra help in achieving their dreams of homeownership.