In an effort to avoid the same issues that plagued the subprime industry, the Federal Reserve will next week announce new rules that would restrict prepayment penalties (something I think I've seen once in the last year anyway), require lenders to make sure borrowers set aside money to pay for taxes and insurance (forced escrow?) and bar lenders from making loans without proof of a borrower’s income (are lenders still doing this?). It would also require lenders to consider a borrower’s ability to repay a home loan from sources other than the home’s value. So now THIS is the next great cure for the mortgage blues, right?
In addition, the Fed once again defended their actions in aiding Bear Sterns and providing last ditch assistance to Wall Street investment houses.