Feds crack down on inflated mortgage fees
"For Sale," sign is displayed outside a home in Springfield, Ill. (July 15, 2010) Credit: AP
The Federal Reserve is banning mortgage brokers and lenders from reaping bigger fees by steering consumers into more expensive home loans.
The central bank says the new rules, which go into effect next April, will bar lenders from steering borrowers into loans that are not in their interest solely because they lender can receive inflated fees.
Such fees have been a contentious issue in the mortgage industry.
Consumer advocates have charged that mortgage brokers fed the housing crisis by steering people into risky home loans that wound up going bust.
The fees were also barred in the sweeping financial overhaul signed by President Barack Obama last month.
