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Attn Captain Obvious | Fed Proposes Rule that Would Require Creditors to Determine a Consumer’s Ability to Repay a Mortgage BEFORE Making the Loan

4closureFraud's picture




 

Lenders
would be required to make sure prospective borrowers have the ability
to repay their mortgages before giving them a loan, under a proposal
released by the Federal Reserve on Tuesday.

Release Date: April 19, 2011

For immediate release

The
Federal Reserve Board on Tuesday requested public comment on a proposed
rule under Regulation Z that would require creditors to determine a
consumer's ability to repay a mortgage before making the loan and would
establish minimum mortgage underwriting standards.

The revisions
to the regulation, which implements the Truth in Lending Act (TILA), are
being made pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act. The proposal would apply to all consumer mortgages
(except home equity lines of credit, timeshare plans, reverse mortgages,
or temporary loans).

Consistent with the act, the proposal would provide four options for complying with the ability-to-repay requirement.

  • First,
    a creditor can meet the general ability-to-repay standard by
    considering and verifying specified underwriting factors, such as the
    consumer's income or assets.
  • Second, a creditor can make a
    "qualified mortgage," which provides the creditor with special
    protection from liability provided the loan does not have certain
    features, such as negative amortization; the fees are within specified
    limits; and the creditor underwrites the mortgage payment using the
    maximum interest rate in the first five years. The Board is soliciting
    comment on two alternative approaches for defining a "qualified
    mortgage."
  • Third, a creditor operating predominantly in rural or
    underserved areas can make a balloon-payment qualified mortgage. This
    option is meant to preserve access to credit for consumers located in
    rural or underserved areas where banks originate balloon loans to hedge
    against interest rate risk for loans held in portfolio.
  • Finally,
    a creditor can refinance a "non-standard mortgage" with risky features
    into a more stable "standard mortgage" with a lower monthly payment.
    This option is meant to preserve access to streamlined refinancings.

The proposal would also implement the Dodd-Frank Act's limits on prepayment penalties.

The
Board is soliciting comment on the proposed rule until July 22, 2011.
General rulemaking authority for TILA is scheduled to transfer to the
Consumer Financial Protection Bureau on July 21, 2011. Accordingly, this
rulemaking will not be finalized by the Board.

###

 

This is one of the oldest tricks in the how to book of government
corruption. Instead of holding your partners in crime accountable, you
pretend that a new rule or law is needed to protect everyone in the
future, and then, you and your co-conspirators laugh your asses off and
continue robbing and stealing.

These requirements have been prominently featured in all of the
regulator’s regulations and lending statutes for a very long time, and
tend to be included again in almost every state’s requirements for a
valid loan.
It is time that the regulators get called on this practice of simply
re-issuing the rule (as if it were new) rather than enforcing it.

More highlights below...

www.4closureFraud.org

Highlights of Proposed Ability-to-Repay Rules

 

 

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Wed, 04/20/2011 - 17:53 | 1190140 NotApplicable
NotApplicable's picture

I just talked to a mortgage guy today, and he said that private, conventional loans are almost extinct since nobody wants to take the risk without charging much higher rates than Fannie. (shocking, I know)

So, it looks as if the private mortgage market is completely dead, murdered by fedgov and its quasi-institutions of Moral and Hazard.

Next up on the agenda, all other types of bank loans. As I've said before, extending credit is going to be a political operation, as there will be no reason for a profit-less endeavor to be undertaken by a non-Federal Reserve bank.

ZIRP4EVA

Wed, 04/20/2011 - 17:26 | 1190043 wisfool
wisfool's picture

The Fed should be as cautious as they sound to be with student loans. 

Who has a better chance of paying a loan back?  Some college kid that hopes to get a good job sometime in the future in a volitile economy or some kid that works in a volitile economy?

the Speed of Stupid 's' != (E/m)^1/2  (i.e.  it takes a while... you can't fix stupid)

Wed, 04/20/2011 - 17:09 | 1189990 BlackholeDivestment
BlackholeDivestment's picture

U.N. Agenda 21; a borderless mark of the delusional dragon that offered an U.N.sustainable development program U.N.apportioned to labor. Labor now stands as the erect obelisk in the eyes of rioting Egyptian etc... slaves, falling for a violent counter intelligence plan that requires an exuse to slaughter them in the name of pre emptive defense for the prophetic false peace agreement among the nations and Israel. The U.N.global urban short term gain, casting it's shadow banking darkpool of compounding debt beyond the Citi Banks in the country, filled the BTFD Cup of Fornication in the hand of the whore riding the inflated beast devouring labor, like a Great Wal Mart of China Middle Class F U  finger on sale now at the marked down price of $ zer0 point 666. The contractors loved the model, the banks where happy to provide even lower than the Fed market interest rates. The U.N.American political wheels, now rolling over the constituents PIIGS with the sinking QE2 that hit the derivative iceburg with all the Queens subjects on board, loved the local and state voters higher home values that have dropped like a margin stone upon a muslim woman with an exposed ankel. ''Captain Obvious'', from an American Civil Affairs Unit, carried out the new world orders and just stood by as an offensive witness in compliance with the local shariah law, while under NWO MCA 2006 that called for torture and death without a call for public reveiw. The Fed had no mercy for Brooksley Born, defense for labor was aborted for an U.N.Sustainable Development Progam that favored the communist nation of China and put a debt prison sentence on the first Born and aborted labor.

The fact is, the Fed proposes rules that mark the beast in the field with debt that seals all, rich and poor, free and bond, large and small. It is amazing to see that the bankers have not been dragged into the street and slaughtered like beasts at this point, much less the political beast. This is proof that the madcow still lives in their foreclosure and this new rule will devalue it down to QE infinity before they kick their own ass into the street and truely begin to self devour at an exponential rate unto QE infinity. http://www.youtube.com/watch?v=gYou7SqyDdo

Wed, 04/20/2011 - 17:01 | 1189940 velobabe
velobabe's picture

thanks for staying on top of this from captain oblivious.

did anyone else notice the cool little bicycle spinning wheels ~ saving trees? that is the coolest spinning bike wheels. how can i get one of those? adorable idea.

spinning wheelS of saving trees.

Wed, 04/20/2011 - 16:59 | 1189930 aerial view
aerial view's picture

yes, more doublespeak from our slave masters to convince the sheeple policies are improving. They want feedback: provide loans at the same rate + 1% as the banks receive. In fact, if you had allowed people with distressed mortgages to refinance at 2-3%, there would not have been a huge foreclosure problem and subsequent collapse of the housing market. I'm sorry, am I out of line for preaching fairness for all?!

Wed, 04/20/2011 - 17:44 | 1190099 NotApplicable
NotApplicable's picture

Yes, way out of line. BTW, 'fair' is really an acronym.

Fuck All Ignoring Reason

Wed, 04/20/2011 - 17:05 | 1189962 chunga
chunga's picture

Way out of line. Fairness went the way of the hoola-hoop. Nobody plays that now.

Wed, 04/20/2011 - 16:27 | 1189815 IdioTsincracY
IdioTsincracY's picture

It's our own damn fault!

They say... you know, regulation is killing us ... so we say deregulate,

then, they say ... trust us, wealth will trickle down, just cut our taxes, ... so we cut their taxes, and they take the money (and jobs) abroad ...

then they say, you know... you're making too much, and have too many benefits ... so we say, cut my pay, cut my benefits ...

then they say .. we could use some sex ... so we bend over!

Wed, 04/20/2011 - 16:12 | 1189755 chunga
chunga's picture

Sucks for them. They make even more money if you don't pay. That's why they were doing it in the first place.

Wed, 04/20/2011 - 16:10 | 1189744 topcallingtroll
topcallingtroll's picture

Has the box-checking in the origination process gotten so complicated and overwhelming that people.forgot the purpose of it?

That's government for you

Wed, 04/20/2011 - 16:06 | 1189709 Soul Train
Soul Train's picture

What are the rules if I am not a white male?

Wed, 04/20/2011 - 16:20 | 1189780 topcallingtroll
topcallingtroll's picture

Please god.....i know he is.just baiting me. Give me strength to resist.

Wed, 04/20/2011 - 16:01 | 1189681 Weisbrot
Weisbrot's picture

what will Barney Frank, the congressional father of subprime have to say? he must be outraged!

Wed, 04/20/2011 - 16:27 | 1189825 IdioTsincracY
IdioTsincracY's picture

yeah, sure ... that's it, barney frank was the problem ...

right!

Wed, 04/20/2011 - 16:22 | 1189667 UP4Liberty
UP4Liberty's picture

Wow - what a f*****g concept. 

Actually determining to see if a borrower can repay a loan.  PURE GENIUS!

Who The F*** are these a**hats? 

Why are they in positions to make such catastrophically unwise decisions?

And why do we continue to allow such mornic behavior with such a damaging effect on ALL of US?

JEEEZ!

Wed, 04/20/2011 - 17:39 | 1190081 NotApplicable
NotApplicable's picture

1) Criminals (just like the Mafia, with cheaper suits).

2) The Federal Reserve Act of 1913.

3) Government schools have pacified the herd.

Any more questions?

Wed, 04/20/2011 - 16:19 | 1189654 UP4Liberty
UP4Liberty's picture

WTF?!

Wed, 04/20/2011 - 15:43 | 1189593 knukles
knukles's picture

On second thought....
Jesus H Christ on a Crutch.
"Proposed Ability to Pay Rules"?

This is way beyond just fucking OK. Kafkaesque

And they wonder about the dollar?
You know, it was a stated policy of the administration, Treasury, Fed, et.,al., just a short while ago that they wanted a weaker dollar.  Remember?  Mass increase in exports, etc.  Bennie said a little inflation'd be good.  'Member? 
Goes the old axiom; never, ever shit on  your own currency.

Once upon a time the money changers were cast out of the temples.  Hint, hint?

Wed, 04/20/2011 - 15:34 | 1189552 knukles
knukles's picture

LOL

The Nash Equilibrium has been breached, devolving to the Fourth Turning meeting the Book of Revelations and Murphy's Law.

"Bozo's Law"

Wed, 04/20/2011 - 15:33 | 1189534 jdm1313
jdm1313's picture

DUH!

 

Does this mean no more NINJA loans? (no income no job or assets?)

Wed, 04/20/2011 - 16:04 | 1189696 Weisbrot
Weisbrot's picture

Folks can still get a NINA loan, No Income No Assets, just based on the size of the downpayment. But at 35% down the other stuff shouldnt matter..... after all the shadow inventory dries up.

Wed, 04/20/2011 - 15:29 | 1189522 MrBoompi
MrBoompi's picture

Frankly if they didn't have this rule before no one should have been allowed to lend money.

What a bunch of losers we have in charge of our economy.

Wed, 04/20/2011 - 15:30 | 1189531 IdioTsincracY
IdioTsincracY's picture

well ... that's what happens when you trust the banks to do the right thing ...

 

deregulate away ....

Wed, 04/20/2011 - 15:39 | 1189574 I am Jobe
I am Jobe's picture

The banks if you may recall said that they will self regulate. WTF, Hang the bitchez all of them. No way can this continue.

Wed, 04/20/2011 - 15:15 | 1189451 I am Jobe
I am Jobe's picture

BTFD consumers. Yeah the MCD jobs will provide you with the dream homes and send people to college. F the bitchez.............FEDS are always late to the party. Take away his fucking PhD, Ben you are a big failure and so are all the fucking PhD holders. Yeah get your fucking piece of pawer and have no common sense.

Wed, 04/20/2011 - 15:17 | 1189447 IdioTsincracY
IdioTsincracY's picture

it's the world where consumers get blamed for having been screwed by the banks!

Wed, 04/20/2011 - 15:13 | 1189434 willien1derland
willien1derland's picture

Folks, c'mon I am certain the Federal Reserve has had a LEGION of PhDs that have labored over this document for years - It is simply PATHETIC - The Federal Reserve is an embarrassment & should be eliminated immediately - A$$CLOWNS!

Wed, 04/20/2011 - 15:13 | 1189429 Sudden Debt
Sudden Debt's picture

HA!!

THAT'S LIKE GOING TO WAR AGAINST A COUNTRY BECAUSE THEY HAVE WEAPONS OF MASS DESTRUCTION, AND THEN LOOKING FOR THEM TO SEE IF IT'S TRUE!!

 

Wed, 04/20/2011 - 15:04 | 1189383 Mercury
Mercury's picture

Not gonna happen.

You can have prudent lending practices or a mortgage portfolio that "looks like America" but not both.

You'll recall that our president, when he wasn't working for ACORN, used to sue banks for mortgage origination "red-lining".

Wed, 04/20/2011 - 15:00 | 1189376 newworldorder
newworldorder's picture

What a novel idea. Now why din't banks think of this before? Sure would have prevented a lot of problems.

-sarcasm on-

Wed, 04/20/2011 - 15:05 | 1189354 Zero Govt
Zero Govt's picture

simple to get around these rules, Goldman Sucks showed you how... show 'Gold' as collateral in an offshore account just not tell the bwankers the collateral is split amongst 500 different investors (leveridged 500/1) and is a paper derivative Gold pool backed by the hard asset, the gold leaf seal from a Nescafe coffee jar (ie. fuk all)

..Hey, if Go-Suck can usurp US Law using offshoring the legal gate's WIDE OPEN for us too... Tora Tora!! 

Wed, 04/20/2011 - 14:54 | 1189352 Ty
Ty's picture

To be fair, if the lender had genuine risk of loss, there would be no need to write a rule like this so "obvious" one.  It would be SUICIDAL not to protect against losses through proper underwriting.  Only in the age of "heads I (banks) win/tails you (taxpayer) lose banking, it does seem rather important.

Wed, 04/20/2011 - 15:19 | 1189461 IdioTsincracY
IdioTsincracY's picture

Suicidal... right!!

But speculation is rampant ... who cares about tomorrow, when I can make few $billions today ...

Wed, 04/20/2011 - 14:53 | 1189343 Capitalist10
Capitalist10's picture

What kind of back-assward world do we live in when the FED has to propose a rule like this?

One in which liberals' desire to engage in social engineering trumps everything else.

Thu, 04/21/2011 - 09:20 | 1191993 mdwagner
mdwagner's picture

If only we could get rid of the liberals!  Then we can have small government and care about the Constitution again like George W Bush gave us!

Wed, 04/20/2011 - 16:11 | 1189750 Dburn
Dburn's picture

What the fuck does that have to do with the article? Credit , good credit , was always issued after an assessment of the borrowers ability to repay. What this seems to be is a modification of the old rules where they would issue a rate popcorn popper mortgage to anyone. Now they are "suggesting" that before the fucker fucks the  fuckee. that they have the ability to take the fucking repeatedly until the loan is paid off. See "risky" loans and massive "douchbaggery".

Only a fucking ideologue who's head is buried in his ass would look at this as an opportunity to spout off against liberal social engineering as if the other dumb ass party never does it with their relentless desire to govern what happens in a bedroom and their feverish desire to have control over a woman's body.

Wed, 04/20/2011 - 14:29 | 1189224 Geoff-UK
Geoff-UK's picture

Or just make them eat whatever shitty mortgages they initiate...what we SHOULD do is stuff back mortgages that Fannie and Freddie took off the banks' hands...then disband Fannie and Freddie, burn down buildings that used to house F&F, then salt the earth so nothing ever grows there again.

 

Then stand-by to burn the banks with the bankers inside if they EVER try to foist their shit debt onto the taxpayers.

 

Wed, 04/20/2011 - 14:13 | 1189125 simonsito
simonsito's picture

wow, is this 2011 on that paper...?

good job!"

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