New rules for higher-cost loans

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New rules targeted primarily at mortgage lenders making higher-cost loans take effect Thursday, more than a year after they were finalized by the Federal Reserve.Many lenders have already adopted some of the changes in their own best interest, such as verifying borrowers' income and assets and assessing their ability to repay a loan after it resets to a higher interest rate.Other provisions, such as a ban on prepayment penalties and the mandatory creation of escrow accounts for the payment of property taxes and homeowners' insurance, were opposed by the lending industry (see story).The escrow requirement goes into effect on Oct. 1 for manufactured homes, along with most of the other changes to the home mortgage provisions of Regulation Z, the language implementing the Truth in Lending Act. But lenders making high-cost loans backed by site-built homes won't be required to establish escrow accounts until April 1, 2010.Those and most other significant Regulation Z rule changes apply onl...