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 July 28, 2009

Federal Reserve Pushes for Additional Rules for Loan Applicants
This past Thursday, the Federal Reserve Board made recommendations for new rules which would make the loan application process more understandable for the borrower. Proposed new rules would include additional disclosures.
The Federal Reserve has proposed that a prospective loan applicant would be presented with a one page outline of the key concerns regarding their loan application. Included would be a graph which would illustrate a comparison of interest rates which would be offered to a lower-risk borrower.

Amended mortgage broker compensation guidelines were also recommended by the Fed. Brokers who place borrowers into high-cost loans would not receive any compensation.

The goal of these new rules was outlined by Ben Bernanke, Chairman of the Federal Reserve Board. He explained during an open meeting of the Board that consumers are entitled to the proper tools that will help them decide which type of mortgage is appropriate for their individual situation.