Fed Proposes New Rules on Equity Loans
The Federal Reserve Board this week proposed new rules requiring lenders to provide home equity loan borrowers with more information about the cost of such loans.</br></br>In general, lenders would have to provide potential borrowers with a written explanation of the terms and conditions of the loan at the time of loan application and before any nonrefundable fee is collected.</br></br>For applications taken over the telephone, lenders would have three days to supply the required information.</br></br>The disclosures must include a full explanation of how the interest rate and monthly payments might change and the circumstances under which immediate repayment of the loan could be demanded.</br></br>Congress has prohibited lenders from unilaterally changing the terms of the loan after it has been taken out.