Thursday, May 13, 2010

Mortgage Lenders Get Punished

Today the Senate voted to ban mortgage lenders and loan officers from received higher pay for offering higher interest rates on loans, and will require that borrowers prove they can repay their loans as part of the overhaul of financial regulations to prevent the collapse of Wall Street and the housing market in 2008. The Senate also voted to let the Federal Reserve retain supervision of smaller banks.

The bill would place restrictions on how mortgage lenders and loan officers get compensated because consumers were encouraged to obtain higher interest rate mortgages that they were unable to pay, resulting in record numbers of foreclosures.

The bill would require borrowers to provide proof of their income by showing tax returns, payroll receipts or bank documents and would eliminate the "no-doc" or "low-doc" loans that were previously offered that did not require proof of income.

Another industry that needs an overhaul is the auto industry repeatedly take advantage of consumers by inflating rates and inserting hidden fees and displaying deceptive ads.

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