Frank Proposes Bill Targeting Institutions That Securitize Mortgages

Financial News Online reports:

• A congressman has proposed a bill to punish any institution that securitizes mortgages as Washington renews its scrutiny of Wall Street before next year’s elections. Congresman Barney Frank, chairman of the House Financial Services Committee, has co-sponsored the bill, which would hold financial firms liable if they securitize loans that violate minimum lending standards. Borrowers could sue to recover the cost, if Frank’s bill passes. The bill would also cut out lending arrangements that many have blamed for this summer’s credit squeeze, including abolishing penalty charges for borrowers who make their payments early and penalizing brokers who push consumers toward high-cost loans. Frank said he hopes to push the bill through before the end of the current Congressional session.

The proposed legislation is contained in bill H.R. 3915 - The Mortgage Reform and Anti-Predatory Lending Act of 2007. For more, see Congress takes aim at securitizations ahead of elections.