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Lenders wary of financial reform

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The financial reform bill passed by the Senate Thursday would exempt lower-risk, single-family mortgages from additional risk-retention requirements aimed at ensuring that mortgage lenders keep some "skin in the game" when they package loans for sale to investors.The Mortgage Bankers Association welcomed the Senate's approach on that issue, saying it would help facilitate a quicker recovery of housing markets.The financial reform bill passed by the House of Representatives in December, HR 4173, would require that lenders or companies securitizing loans retain 5 percent of the credit risk of any loan they transfer or sell to investors.But the House bill would allow "an appropriate agency" to reduce the amount of risk retention or exempt lenders altogether when they make loans regarded as less risky.Regulators would have the authority to exempt loans that meet certain interest rate thresholds, are fully amortizing, or are included in securitizations in which third-par...