Fed to hold Tues meeting on mortgage rule change

WASHINGTON (Reuters) - The Federal Reserve Board said on Friday it has scheduled an open board meeting on December 18 to discuss proposed rule changes on mortgage lending to address unfair and deceptive lending practices.

The 10 a.m. EST meeting will consider proposed amendments to Regulation Z, which implements the Truth in Lending Act and the Home Ownership and Equity Protection Act.

The Fed has been criticized for failing to use its authority under HOEPA to help home loan borrowers with poor credit histories. It is expected to propose limiting prepayment penalties for those subprime mortgages during the low "teaser" rate periods before rates reset to higher levels, according to sources familiar with the proposals.

(Reporting by David Lawder; Editing by James Dalgleish)