New rules to restrict lenders, protect mortgage borrowers

Federal regulators for the first time are laying out rules aimed at ensuring that mortgage borrowers can afford to repay the loans they take out.

The rules being unveiled Thursday by the Consumer Financial Protection Bureau impose a range of obligations and restrictions on lenders, including bans on the risky “interest-only” and “no documentation” loans that helped inflate the housing bubble.

Lenders will be required to verify and inspect borrowers’ financial records. They generally will be prohibited from saddling a borrower with loan payments totaling 43 percent of the person’s annual income.

CFPB director Richard Cordray, in remarks prepared for an event Thursday, called the rules “the true essence of ‘responsible lending.’ “

The rules, which take effect next year, aim to “make sure that people who work hard to buy their own home can be assured of not only greater consumer protections but also reasonable access to credit,” he said. 

Google Inc. plans to invest $200 million in wind project

Google Inc. is investing $200 million in a Texas wind farm, the Internet search leader’s latest big bet on the future alternative energy.

The commitment to the Spinning Spur Wind Project announced Wednesday brings Google’s total investments in alternative energy to about $1.2 billion. The company has backed 11 different projects with a combined capacity to produce 2 gigawatts of electricity – enough to power 500,000 homes for a year.

Google has been pouring money into alternative energy since 2010 because it believes the investments will prove profitable as the demand for cleaner sources of power rises amid increasing concerns about the pollution caused by oil and coal. The company, which is based in Mountain View, Calif., is consuming more power as it builds more data centers to run its Internet search engine and other online services used by more than 1 billion people in the world.

The Texas wind farm is located in Oldham County in the Panhandle. 

U.S. stock indexes respond to decent earnings reports

Stocks rose on Wall Street Wednesday after U.S. corporate earnings reports got off to a good start.

The Dow Jones industrial average climbed 61.66 points to 13,390.51, its first gain of the week. The Standard & Poor’s 500 index gained 3.87 points to 1,461.02, and the Nasdaq composite rose 14 to 3,105.81.

Having rallied after a last-minute resolution stopped the U.S. from going over the “fiscal cliff,” stocks are facing their first big challenge of the year as companies start to report earnings for the fourth quarter of 2012. Throughout last year, analysts cut their outlook for earnings growth in the period and now expect them to rise by 3.21 percent, according to data from S&P Capital IQ.

“Maybe earnings expectations were a little too low,” said Ryan Detrick, a strategist at Schaeffer’s Investment Research. “You don’t need to have great earnings, you just need to beat those expectations” for stocks to rally, Detrick said.

Aluminum maker Alcoa, usually the first Dow component to report earnings every quarter, brought in more revenue than analysts had expected.

— From news wire reports