The Fed Speaks!

For those of you who look at foreclosures as a possible investment, as well as anyone else looking to finance a real estate purchase, the Fed announced new regulations last week. Basically, the Fed is now requiring that banks perform full due diligence before making a real estate loan. This means that from now on, banks will be acting more responsibly in deciding who borrows and who is denied. Instead of taking a borrower's word for it on income, the lender will require proof of income. Stated income loans are, happily, a thing of the past (they never should have been allowed in the first place). Lenders will also have to be more careful in the appraisals they accept for a property.

What all of this means is that the lenders will be doing what they historically used to do before greed and stupidity took over much of the lending process.