WASHINGTON – Concern over the battering in the secondary markets has led lawmakers to discuss setting new restrictions on mortgage securitizations.
Rep. Paul Kanjorski, chairman of the House Financial Services Subcommittee on Capital Markets, predicted this week the House will pass a regulatory reform bill this year, including new standards for securitizing mortgages and other assets.
"We're coordinating our efforts with the European Community and the (United Kingdom) to try and come up with similar responsibilities when it comes to securitization." said the Pennsylvania democrat after speaking to NAFCU’s annual Congressional caucus. He said securitization became too speculative during the subprime crisis.
Among the possibilities being discussed are that loan originators retain a certain minimum ownership, like 5%, of the loans being sold in the securitization.
Kanjorski said he thinks the business can be rebuilt with less risk and more security. "I think having skin in the game is a good principle," he said, adding that this is particularly true when it comes to mortgage makers.
