WASHINGTON — The Federal Reserve endorsed an array of new rulesthat may give future homebuyers greater protections than thoseavailable to those who bought in the housing bubble years.

Acting on protecting consumers against mortgage scams and shadylending practices, the Fed approved safeguards for subprimeborrowers that will apply to all banks, credit unions and mortgagebrokers.

The nation's banking regulator and architect of monetary policy,The Fed's new rules would:

• restrict lenders from penalizing certain subprime borrowers withtarnished credit or low incomes who pay off their loans early (noprepayment penalties), with some restrictions on expiration andconditions;
• compel lenders to create escrow accounts so that subprimeborrowers can pay for taxes and insurance;
• Require that lenders cannot make loans when they don't have proofof a borrower's income (no “stated income loans”);
• Forbid lenders from engaging in practices without considering aborrower's ability to repay a home loan by using a home increasingvalue to do so.

Fed Chairman Ben Bernanke said that unfair and deceptivepractices “have no place in our mortgage system,” because they hurtborrowers, their families and entire communities. The Fed isn't yetthrough rethinking the regulatory environment covering mortgagesand is still contemplating other changes, including rules ondisclosures and certain advertising restrictions.