Federal Reserve to restrict exotic mortgages and high-cost loans on 100 Mortgages

Federal Reserve chairman, Ben S. Bernanke, has said that with the turbulence in both the housing and financial markets, he has no option but to issue new lending rules next week, this will restrict exotic mortgages and high-cost loans for those who have weak credit.

Bernanke, has also said that the Fed are also considering extending its program of low-cost overnight loans to the nation’s largest investment banks into next year.

This lending program which started back in March was supposed to be a temporary program, which was in response to liquidity problems on Wall Street, following the near-collapse of Bear Stearns.

Mr. Bernanke was at a recent forum in Arlington, Va., which was all about lending for low- and moderate-income households, Bernanke had said that Bear Stearns’s difficulties had highlighted weaknesses in the financial system that policy makers were trying to address.

According to The New York Times, the remarks that the Fed Chairman had said seems to have had reassuring effect on the markets just a day after the surprising drop in the shares of Fannie Mae and Freddie Mac. The shares in both these government sponsored companies were up slightly from yesterday.

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1 Comment
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This only makes sense to do BUT he needs to make sure the loans from banks and investment houses follow the same criteria as his lending requirements! No AAA ARM’s, Neg Amor or ALT-A’s !!!!!!

Comment by ComicPro — July 8, 2008 @ 8:46 pm