New rules will soon be put into place to make sure that banks don’t advertise easy loans in a way that is misleading to consumers. In the past, the availability of easy loans led many in the subprime market to seek mortgages that they now cannot afford. These new rules will definitely make the easy loans more difficult to get, and banks will have to curb many of their practices in order to comply with the new rules and regulations, or face heavy fines.
“The subprime market doesn’t really exist right now,” Federal Reserve Board Vice Chairman Donald Kohn said. “What we’re asking is what do we want it to look like when it comes back. We don’t want it to look like it has [the] past couple of years.”
“This rule will help eliminate areas of uncertainty that threaten to further weaken the market and [will] establish clear, well-balanced regulations that will benefit both borrowers and lenders,” said Rep. Carolyn Maloney (D., N.Y.). “Unfortunately, however, the new rule won’t help the millions of homeowners who’ve already fallen behind or defaulted on their mortgages, but it can help to prevent another housing crisis.”
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