Released: October 23, 2007

Bill would tighten mortgage lending standards

Source: Dina ElBoghdady, Washington Post

Barney Frank, chairman of the House Financial Services Committee, yesterday unveiled legislation aimed at curbing abusive lending practices that, he said, have fueled an alarming rise in foreclosures.

The long-expected bill, which was immediately criticized by banking groups, would set standards for “what loans should and should not be made nationally,” said Frank, a Massachusetts Democrat, whose committee has jurisdiction over the industry. The group affected most by the bill would be subprime borrowers, who account for most of the foreclosure problems.

The measure would allow some of those borrowers to sue entities that pool loans and sell them as securities to the secondary market. Borrowers could sue to rescind their mortgages and recoup their legal costs if they received a loan that violated the principles outlined in the bill, Frank said.

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