Key provisions of a Federal Reserve plan to protect home buyers from shady lending practices:
-Restrictions on penalties for paying off a mortgage early.
-Requirements to set aside money to pay for property taxes and homeowners' insurance.
-Showing proof of income when seeking a home loan.
For both risky and not-so-risky borrowers, the Fed proposed:
-Prohibiting certain types of misleading or deceptive advertising for home mortgages. For instance, it would bar using the term "fixed" to describe a rate that is not truly fixed over the life of the entire loan. It also would require that all applicable rates or payments be disclosed in ads with equal prominence as advertised introductory "teaser" rates.
-Requiring lenders to provide financial disclosures to borrowers early enough for them to use while shopping for a mortgage.
source: ocregister.com
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