Fed Unveils Home Mortgage Rules

New Rules Include Protections to Regulate Risky Loans

By Howard Schneider

Washington Post Staff Writer
Tuesday, December 18, 2007; 5:17 PM

The Federal Reserve today unveiled home mortgage rules meant to curtail the subprime lending practices that have roiled the global financial system as European banks moved again to smooth credit markets and calm investors.

The measures announced by the Fed include a host of consumer protections meant to further regulate the type of risky loans that in recent years allowed less creditworthy borrowers to take out home mortgages. When those mortgages became bundled into larger, more complex investments -- and began falling into default -- it left some of the world's biggest banks and investment houses unsure about the value of their assets and contributed to an evolving crisis in global debt and credit markets.