According to recent reports, the US Federal Reserve is tightening lending rules for sub-prime applicants. This will no doubts reduce the number of unserviceable loans, bankruptcies and bad credit cases.
Bernanke says that Feds want the borrowers to act more responsibly, by better evaluating their financial position, and fiscal responsibilities. What's the penalty? First of all, "higher-priced mortgage loans" category has been devised, that will carry an extra 3% loading on interest rate.
Feds also want to restrict the availability of "stated income loans" where borrower's income is declared, rather than documented. Many bad credit cases originates from this group.
Let's hope, the mortgage loans, particularly in the sub-prime sector will be managed now more responsibly; not only by the public, but by the banks and financial institutions greedy to earn a profit and any cost.
