Lenders fire back at Fed's rule changes

WASHINGTON, April 28 (UPI) -- U.S. lenders are criticizing Federal Reserve proposals they say would slow lending in an already poor mortgage market, financial experts said.

Rule changes that would force mortgage companies to calculate if the borrower could afford the loan, disclose hidden fees and forgo allegedly misleading advertising, have drawn 5,000 comments, The New York Times reported Monday.

Most lenders say the changes would not address the problems that led to the mortgage crisis, the Times reported.

"We do have concerns about the increased regulatory burden, liability and reputational risks that lenders might face," Kieran P. Quinn, chairman of the Mortgage Bankers Association, told the Times.

The new rules would extend oversight to mortgages carrying interest rates 3 percent above the current Treasury rates.

The Fed appears to be adjusting its position, however.

Randall S. Kroszner, Fed governor and head of the central bank's consumer and community affairs committee, said in March, "We have heard … the proposed trigger could cover the market too broadly."

The proposals were unveiled four months ago. Some proposals are under review in Congress. The Fed, however, has the authority to set mortgage standards, the Times reported.