Board of Governors of the Federal Reserve System

July 14, 2008

We are meeting today to consider regulatory amendments to better protect consumers in their participation in the mortgage market.  Rates of mortgage delinquencies and foreclosures have been increasing rapidly lately, imposing large costs on borrowers, their communities, and the national economy.  Although the high rate of delinquency has a number of causes, it seems clear that unfair or deceptive acts and practices by lenders resulted in the extension of many loans, particularly high-cost loans, that were inappropriate for or misled the borrower.  The proposed final rules we will discuss today are intended to protect consumers from unfair or deceptive acts and practices in mortgage lending, while keeping credit available to qualified borrowers and supporting sustainable homeownership.

Importantly, the new rules will apply to all mortgage lenders, not just those supervised and examined by the Federal Reserve.  Besides offering broader protection for consumers, a uniform set of rules will level the playing field for lenders and increase competition in the mortgage market, to the ultimate benefit of borrowers.  We will work collaboratively with our fellow regulators, both state and federal, to see that the rules are consistently applied and vigorously enforced.

The Board received extensive public comment on its proposed rulemaking, which we found very helpful.  Much of that public input is reflected in the final rules that we will discuss today.  I would also like to take this opportunity to thank the Federal Reserve staff members who developed and refined these rules for their hard work and dedication.

I will now turn to Governor Randall Kroszner to discuss the proposal in greater detail.