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Wednesday, May 30, 2007

Fed Hearing: Home Ownership and Equity Protection Act

by Calculated Risk on 5/30/2007 10:31:00 AM

On June 14th, the Fed will hold a hearing under the Home Ownership and Equity Protection Act.

Hearing participants will discuss whether the Board should use its rulemaking authority to address concerns about certain terms and practices related to home mortgage loans, including:
• Prepayment penalties
• Escrow accounts for taxes and insurance on subprime loans
• "Stated income" or "low doc" loans
• Consideration of a borrower's ability to repay a loan
Participants will also discuss the effectiveness of state laws that have prohibited or restricted these and other terms or practices, and whether the Board should consider adopting similar regulations to curb abusive lending practices. The Board is also soliciting written comments from the public. Comments are due August 15, 2007.
Some of the questions are interesting:
• Should stated income or low doc loans be prohibited for certain loans, such as loans to subprime borrowers?
• Should stated income or low doc loans be prohibited for higher-risk loans, for example, for loans with high loan-to-value ratios?
Oh well, more hearings.