The Fed has proposed changes to Reg Z that would greatly affect “subprime” loans:
http://www.federalreserve.gov/newsevents/press/bcreg/20071218a.htm
The most significant of these changes would be no more “liar loans” for subprime borrowers, defined as those whose APR is 3% above comparable treasury yields. This particular provision does NOT affect investor loans, only owner occupied borrowers.
This move will clarify some of the confusion the lender industry has had over what steps to take in future lending practices, and will hopefully result in a loosening up on “A” loans not covered by these new regulations.
