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Industry, consumer groups critique anti-predatory-lending bill

Consumer group complains bill would protect MBS investors

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A consumer advocacy group says a bill intended to combat predatory lending contains too many loopholes protecting Wall Street investors from lawsuits when they purchase mortgage loans from deceptive or predatory loan originators. Michael Calhoun, the head of the Center for Responsible Lending, told House lawmakers that investor demand for securities backed by subprime loans "lies at the heart of today's mortgage meltdown." During the housing boom, Calhoun said, "The demand from Wall Street (for mortgage-backed securities) was so intense that it encouraged subprime lenders to abandon reasonable qualifying standards, to forget about standard documentation requirements, and to ignore whether borrowers could actually afford the loan." CRL and other consumer groups say borrowers who were the victims of deceptive or predatory lending practices should have the right to file class-action lawsuits against investors who purchase mortgages from loan originators such as mortgage brokers and banks...