Across the whole range of higher-priced mortgage loans, our proposal offers three rules that, working in combination, would help ensure that borrowers can afford their payments. First is a requirement that a lender maintain responsible underwriting practices that genuinely assess borrowers' ability to repay. This general requirement would be complemented by a specific requirement to verify borrowers' income and assets.
A third rule would require lenders to escrow property taxes and homeowners insurance to help borrowers meet these obligations. This robust approach to affordability would help ensure that the subprime market promotes sustainable homeownership. Just as important, it would also help protect consumers from abuse.