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Fed Rule Adds Mortgage Rate Disclosures

The ""Federal Reserve"":http://www.federalreserve.gov recently approved ""new regulatory statutes"":http://www.federalreserve.gov/newsevents/press/bcreg/20081020b.htm requiring mortgage lenders to disclose to borrowers how much interest rates differ between prime mortgages and the higher-priced subprime loans offered to less-affluent borrowers.
The new amendments to Regulation C require disclosures to prospective borrowers if the spread between prime and subprime rates is equal to or greater than 1.5 percentage points on a first-lien loan or greater than 3.5 percentage points on a second mortgage.
The Fed is attempting to safeguard the nation's housing market against repeating its recent mistakes. The agency said that in setting the new disclosure thresholds, its focus was primarily on the subprime mortgages, which triggered the current housing crisis, and some say today's economic depression.
The new rule becomes effective October 1, 2009.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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