The financial regulatory bill that passed the Senate last week included provisions to regulate pay practices in the mortgage industry. According to Friday’s Wall Street Journal:
"The bill also takes aim at mortgage-industry pay practices. It prohibits paying brokers and loan officers more to steer borrowers to higher interest rates or certain risky features. Commissions would be based on the size or number of loans originated. The bill also requires lenders to determine whether a borrower has a reasonable ability to repay the mortgage."*
The article did not indicate whether the bill also deals with borrowers who lie about their income or who knowingly take out mortgages bigger than they can afford with the idea that they can refinance once the house goes up in price.
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* Robin Sidel and Ruth Simon, "A Mixed Bag in Store for Consumers," The Wall Street Journal, May 21, 2010.
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