WASHINGTON–CUNA has written the Federal Reserve Board in favor of curbing certain predatory lending practices in light of the board's recent hearings on home equity lending.
CUNA wrote that it backs restricting prepayment penalties and a prohibition on these penalties for loans that target subprime and first-time borrowers. Enhanced disclosure of prepayment penalties might also be prudent.
The credit union trade also supported requirements in underwriting to consider a borrower's ability to repay the taxes and insurance and that escrow accounts are the best way to ensure payment. "We believe that the disclosure of the loan payments should indicate whether this includes tax and insurance payments," CUNA's letter read.
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