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That document, called the Good Faith Estimate, lists various mortgage fees, like the loan origination charge and transfer taxes, as well as third-party expenses, like fees for inspections and title insurance, which protects the borrower against any undetected problems with the deed to the property.
The bank can claim the difference from the borrower against all present and future assets and earnings.
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Some already test borrowers against rather more demanding interest rate targets nearer 7.5%.
However, the governor, Mark Carney, warned borrowers against getting too comfortable with rock-bottom rates.
"We want to build a risk model that allows for delinquencies but hedges small borrowers against the problems they face," he said.
MORTGAGE brokers and lenders will often caution borrowers against charging up their credit cards or changing jobs before the closing date on a home loan.
But banks and investors are under some pressure because legislators have pledged to pass laws to protect subprime borrowers against foreclosures.
Along with the attorney general, federal prosecutors in Manhattan have requested information about the Baum firm's practices, according to a lawyer who has represented borrowers against the firm.
In a 2002 lawsuit by Acorn on behalf of a group of borrowers against Household Finance, Acorn said that lenders referred to the practice as "closing the back door" by making it too costly for borrowers to get out of loans with rising rates.
Sarah Ludwig, executive director of the Neighborhood Economic Development Advocacy Project, a fair-credit access organization based in Manhattan, said: "It's a huge victory for New Yorkers because, for the first time, this state has strong protections for borrowers against some of the worst abusive practices.
Protecting individual lending institutions and individual borrowers against losses isn't.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com