Federal Reserve Proposes New Mortgage Regulations —
Public Comment Period Begins
Responding to increasing pressure from the financial sector and lawmakers, on December 18, 2007, the Federal Reserve released a lengthy proposal that is expected to significantly impact a wide array of mortgage lending practices (see list below). The new regulations are expected to be enacted largely as proposed, but a three-month public comment period may have some influence
on the details.
Making an observation that has been a Capitol Hill mantra for several months, Fed Chairman Ben Bernanke noted that "unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities, and, indeed, the economy as a whole." Federal Reserve
Governor Randall Kroszner added, "We believe that these proposals will provide a robust set of protections for consumers."
The proposal marks a sharp role reversal for the Federal Reserve, which has been criticized for failing to prevent the now-rampant mortgage crisis, and failing to address the problem even as the subprime mortgage market collapsed in the summer of 2007. The president and lawmakers
on both sides of the aisle have called upon the Fed to exercise its existing authority to regulate the industry.
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