Posted on 19 July 2008 by Jamie
This week, the federal government made some important changes to Truth in Lending laws. Most notably, they created stricter regulations on high cost home equity loans.
Housing Wire reports:
“For loans defined as high-cost, the revamped TILA regulations will ban stated income and related lending practices, as well as forcing lenders to assess repayment ability based on the highest scheduled payment in the first seven years of the loan; the new regulations also put significant limitations on prepayment penalties and require borrowers to escrow for taxes and insurance during the first year of their loan.”
Beginning in late 2009, high cost stated income loans will be illegal. The new legislation defines a “high cost” loan as one that is 3.3% above the average prime rate.