Industry News

Bill could hold MBS investors liable for deceptive loans

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Barney Frank and Spencer Bachus, leaders of the House Financial Services Committee, are reportedly in agreement on the need for legislation that would hold Wall Street investors who purchase mortgage-backed securities liable for predatory loans. Making investors liable for predatory loans could reduce their use, but might also increase the cost of borrowing and make it harder for subprime home buyers to obtain legitimate loans. In an interview with Bloomberg News, Frank said that while Congress must preserve home buyers' access to credit, the impact on "the ability of people in the bond market to make money is simply not a factor.'' Frank, the Massachusetts Democrat who chairs the committee, said he expects Congress to pass a bill addressing predatory lending this year. The committee has scheduled an April 17 hearing on subprime lending. Bachus, the ranking Republican on the committee, told Bloomberg News that he would support legislation creating "assignee liability," allowing victims...