Here come the mortgage police

The Federal Reserve said it will be using tougher measures to deal with problems in the subprime mortgage industry. Previously the Fed had issued guidelines and suggestions to the lending industry to ensure they do not stick borrowers with loans they cannot afford.

But in testimony before Congress today and yesterday, Fed Chairman Ben Bernanke said the central bank is reviewing new measures to protect borrowers and consumers from abusive practices.

One big target: those easy money ads mortgage companies and brokers endlessly flash. Bernanke said the Fed would be issuing new rules under the Truth In Lending Act "to address concerns about mortgage loan advertisements and solicitations that may be incomplete or misleading and to require lenders to provide mortgage disclosures more quickly so that consumers can get the information they need when it is most useful to them."

Bernanke told lawmakers the Fed has already required lenders to better disclose the terms of adjustable rate mortgages, including such risks as "payment shock and rising loan balances."