[JURIST] The Federal Reserve Board on Monday approved new rules for home mortgage loans [draft regulations, PDF; press release] designed to reduce unfair lending practices and increase consumer protection. The new rule amends the Truth in Lending Act [text] to include prohibitions against granting loans without a verification of the borrower's ability to repay, bans on some debt prepayment penalties and requirements that lenders sometimes establish escrow accounts and homeowner's insurance. Lenders will also be prohibited from coercing appraisers to falsely represent a home's value, using unfair fee structures and misrepresenting or failing to provide an account of total loan costs. Chairman of the Federal Reserve Ben Bernanke said [transcript] at the board meeting:

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.