New regulations target predatory lending ads

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By Connie Thompson

Summary

With millions of families still suffering the consequences of predatory lending, the federal government is cracking down on some of the practices that created the problem. New regulations target loan advertising.

Story Published: Oct 13, 2009 at 6:57 PM PDT

Story Updated: Oct 13, 2009 at 7:33 PM PDT

New regulations target predatory lending ads
With millions of families still suffering the consequences of predatory lending, the federal government is cracking down on some of the practices that created the problem.

New regulations target loan advertising. The new advertising rules took effect this month. One of the big terms under scrutiny is "fixed rates."

Lenders can still promote fixed rates, but only if the rates are truly fixed for the duration of the loan.

All information in the ads must be clear and conspicuous. And any special conditions must be disclosed with equal prominence to the offer in question.

If there are additional fees and charges, or the loan is secured by a lien against your property, that information can no longer be buried in the fine print. And loan promoters cannot claim they have counselors to help you.

It's now illegal for ads to make it look like an offer is endorsed or supported by the government. And all payment comparisons- must be fair and accurate, with no hidden catches.

The new rules apply to all forms of advertising -- newspaper, TV and radio, the Internet and even direct-mail.

Other laws now in effect require lenders to give you a good faith estimate of all the costs, including a payment schedule, within three days after you apply for a mortgage loan.

Lenders and loan originators are now prohibited from making loans without considering the borrower's ability to repay based on their income and assets.