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Fed, FTC Propose New Rules on Lenders

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The Federal Reserve and Federal Trade Commission proposed new rules on Thursday which would require lenders to inform consumers of unfavourable developments or changes to the terms of their loans.

"Risk-based pricing refers to the practice of using a consumer's credit report, which reflects his or her risk of nonpayment, in setting or adjusting the price and other terms of credit offered or extended to a particular consumer," explained the press release from the Fed. "Many creditors offer more favorable terms to consumers with better credit histories."

Under the proposed regulations, the lenders would also have the option of divulging a consumer's credit risk rating.

By Erik Kevin Franco and edited by Cristina Markham
©CEP News Ltd.

Posted May 08 2008, 07:00 AM

Filed under: Federal Reserve, federal trade commission, ftc

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on Thu, May 8 2008 7:00 AM

Explain to me again why we need credit card companies: Credit Beauras , Mortgage Companies etc ..... Why don't we just eliminate the middle man and let FHA, Fanny and Freddie handle it : Give the consumer loans at prime rate plus 1 or 2 points and let all the money changers go to work for the govenment ! That certainly would fix many of the economies problems from where I stand !

coop

on Thu, May 8 2008 7:00 AM

With the many inaccuracies on credit reports and the strict credit score guidelines the lenders impose, I would think that the credit industry should be called on the carpet also. One point less on the credit report could be the difference of lowing a home ownerâ€™s mortgage payment to them losing their home to foreclosure due to adjusting rates.

Anonymous

on Thu, May 8 2008 7:00 AM

I agree that the Credit Reporting agencies have got to do a better job if everything is based on the score they are giving out. I also believe those that report to the agencies have got to do a better job.

impressed

on Thu, May 8 2008 7:00 AM

What is accomplished here? Does the Fed's think those with poorer credit management should be given the same options as an excellent credit manager? If a client has been late paying on an account of $3,000, the lender should lend the client an accoount of $200,000 and 8% each year for 50 years and so they can harvest the equity bonus in the future sometime. Hellooo? Greed for money is a powerful force.

Mike

on Thu, May 8 2008 7:00 AM

Credit agencies are simply wharehouses of information. They only report what has been reported to them. I think the focus should be turned back to the consumer that they be educated as to what is reporting on their credit bureau and how to easily dispute inaccuracies. Beyond that the creditors that are inaccurately reporting items to a persons credit bureau should be called on the carpet. ie...if a creditor is going to take the time and effort needed to report a derogatory item to the credit bureaus they should also be required to take the same time and effort to report that the item has been satisfied or is current when the consumer does their part. Creditors who fail to update the satisfactory status of a tradeline should be fined for not doing so.

anonymus

on Fri, May 9 2008 7:00 AM

one way to fix this current problem of forclosure is by modifying every home owner's rate to the national par rate accross the board. what's happened is every american wants the dream of owning a home no matter the cost but in true reality the dream is temporary based on the rates and programs that are offered to some consumers. let's all be happy americans and lets have all banks modify all these ridiculous rates and programs issued to home owners in the past.

loan officer J

on Fri, May 9 2008 7:00 AM

Hello people-why do you think these consumers have a 550 score? They never pay anyone! The have collections ranging from cell phone service, medical bills, unpaid rent, etc. They didn't pay their credit card bills (at all) so they've been charged off. They've had auto's repo'd-the list goes on & on. Why should my lender give them a 5.50% rate that a consumer with a 700+ score gets?

uw of the day

on Wed, May 14 2008 7:00 AM

we already have all of that-all smoke and mirrors-lets kill the lenders who are left - that horse has already left the barn

30 Yr FRM	5.32%	-0.10%
15 Yr FRM	4.77%	-0.10%
1 Yr ARM	4.94%	0.01%
5/1 Yr ARM	4.88%	-0.11%
30 YR Tres	4.32%	-0.01%
Fed Prime	3.25%	0.00%
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