B&C Securitizers May Face Liability

Securitizers of subprime mortgages will likely face some assignee liabilities under a predatory lending bill that House Financial Services Committee Chairman Barney Frank, D-Mass., plans to introduce in May."I do believe there has to be some assignee liability," Rep. Frank told the National Association of Mortgage Brokers Legislative Conference. He said he believes some level of liability is needed to prevent the origination and securitization of bad loans. "It is the best enforcement mechanism we could have," he said. It will also give regulators leverage to get securitizers to exercise forbearance when there are problems in the subprime market. Chairman Frank also said he will steer away from a suitability standard, which is favored by many consumer advocates, and focus on the ability of the borrower to repay the loan.