House Financial Services Committee Chairman Barney Frank offered more details Thursday on his plan for mortgage lending reform.
The Massachusetts Democrat said he plans to toughen underwriting reform from last Congress, with bans on 100% securitization, harsher penalties for offering unaffordable loans, and assigning servicers the task of modifying loans to prevent foreclosure. "We will be passing in April in the House a subprime bill that I believe will be better than the one we passed in 2007," he said in a speech at the National Community Reinvestment Coalition conference.
The political tides have turned to ease passage of stricter standards, Frank said. In his bid to enact stiffer reform last Congress, he said, "the lobbying by people in the industry was too strong. That's changed."
He said he would hold mortgage originators to more exacting standards and give homeowners private rights of action to sue in foreclosure disputes.
Frank said he would oppose a blanket six-month foreclosure moratorium, and he said Rep. Maxine Waters, D-Calif., is working on legislation that would compel servicers to conduct modifications. He also said he plans to require originators and securitizers to retain some risk when underwriting and packaging loans. The first such reform would be handled in the subprime bill, which he plans to move this month, but he said he hopes to set standards on risk retention for all loans in a broader bill later.
