Fed Dictates: Mortgages Must Be Affordable

July 8, 2008

Excerpted from Federal Reserve Chairman Bernanke’s speech at the FDIC’s Forum on Mortgage Lending for Low and Moderate Income Households (July 8, 2008):

“Next
week, the Federal Reserve Board will issue new rules on mortgage
lending, using its authorities under the Home Ownership and Equity
Protection Act. These new rules, which will apply to all lenders and not just banks,
will address some of the problems that have surfaced in recent years in
mortgage lending, especially high-cost mortgage lending.”

The New York Times “Fed to Clamp Down on Exotic and Subprime Mortgages” reports that all are not happy with the proposals. I first detailed these in “Common Sense comes to the Fed”.
The Fed received over 5,000 critical letters from the mortgage and
housing industries. The American Bankers Association, the Mortgage
Bankers Association and the Independent Community Bankers of America
trade groups had no compliments either. All this because our Fed
Chairman wants home buyers to be able afford their mortgages without
having to sell their homes.

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