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Released: August 17, 2010

Fed adopts rules meant to protect homebuyers

Source: David Streitfeld, New York Times (Free Registration)

The Federal Reserve on Monday moved to end a controversial lending practice that had helped propel the housing boom to unsustainable heights and then accelerated its collapse.

The Fed announced that it was adopting new rules banning yield spread premiums, which allowed mortgage brokers and lenders to gain additional profit from loans by charging borrowers higher-than-market interest rates.

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