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The rules would apply to most home mortgages, but not to home equity lines of credit, so-called reverse mortgages, mortgages on mobile homes and other specialized loans. The proposal is part of an ongoing overhaul of the mortgage market. Already, under the financial overhaul law, mortgage brokers can no longer receive bonuses for convincing people to get higher-cost loans. It also bans last-minute changes to the closing costs of loans. Lenders generally would not be allowed to charge people more for closing than the amount listed in the loan estimate form. To protect vulnerable borrowers with imperfect credit, the proposal expands what is considered a "high-cost mortgage," a mortgage with an interest rate or fees deemed to be steep. People who receive mortgages deemed "high-cost" receive special protections from steep fees and other confusing features. Under the rule, people with "high-cost mortgages" could not be charged balloon payments
-- large lump-sums that typically are due at the end of a loan. They also could not be charged a penalty for repaying their loans early. The proposed rule is open for public comment until Nov. 6.
[Associated
Press;
Copyright 2012 The Associated
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