Called Regulation Z—or “Truth in Lending”—the Federal Reserve is proposing changes to protect consumers from unfair or deceptive home mortgage lending and advertising practices. Federal Reserve Chairman Ben S. Bernanke says their goal is to promote responsible mortgage lending to benefit consumers and the economy. The truth is Regulation Z has been around – and abused – for years. Watchdogs at Household – HSBC Watch say the violations, and excuses for them, are hard to believe.

“When a lender says things like ‘a statement is not mandatory’ they have no clue about Regulation Z” said the watchdog. “Regulation Z also mandates timely processing of payments but HSBC and Household International have had a problem with that since 1994″ they said. Just enforce existing Regulation Z provisions seems to be an intelligent theme.

The proposed amendments include four key provisions with “higher-priced mortgage loans” [subprime loans]: Creditors can’t make a loan if the borrower can’t repay it; creditors can’t make a loan without verifying a borrower’s income and assets; certain conditions must be met to charge prepayment penalties; and creditors must establish an escrow account for taxes and insurance.