Ideas for regulations on subprime loans are popping up all over the place. The latest to enter the fray is the Federal Reserve, which is becoming more involved in this credit crisis by the day. The latest suggestions made by the Fed includes regulations on subprime loans that require the lender to make sure that the borrower can repay. Inman News reports on the amendments to regulation Z, which is part of the Truth in Lending Act:

• Verify a borrower’s ability to repay a
  loan with an adjustable-rate mortgage after a payment reset, including
  property taxes, homeowners insurance and other expenses.

• Document income and assets, using a borrower’s Internal
  Revenue Service Form W-2, tax returns, payroll receipts, financial
  institution records, or other third-party documents that provide
  reasonably reliable evidence of the consumer’s income and assets.

• Establish escrow accounts for taxes and insurance, which borrowers could opt out of after one year.

These are very interesting regulations on subprime loans. While they won’t stop banks from trying to get those with poor credit to take them, at least it should cut down on foreclosures to some extent, since those who really shouldn’t get home loans won’t be able to by that route.