Fed Takes Aim at Deceptive Home Lending Practices

By David Cho
Washington Post Staff Writer
Wednesday, December 19, 2007; A01

The Federal Reserve proposed new regulations yesterday to clean up a broad array of deceptive mortgage lending practices, a move that represents the central bank's most significant response to the nation's housing tumult.

The proposed rules signify a shift by the Fed toward an active regulatory role over the mortgage business and would affect a wide range of borrowers, lenders, banks and brokers. Home buyers would have to provide proof of income to ensure that they are not taking on more debt than they can handle. Mortgage ads could not promote only low "teaser" rates. Victims of predatory lending would be empowered to sue their mortgage providers.