'Bright-Line' Foes Seek GOP Support

Opponents of a "bright-line" test to place stricter limits on Fannie Mae's and Freddie Mac's activities are hoping to get enough Republican support to strip the test from a GSE regulatory reform bill that the House Financial Services Committee is scheduled to mark up on May 25.The GSE bill (H.R. 1461) requires the new regulator to issue a regulation that establishes a bright line between GSE and lender activities. The test is designed to keep the two government-sponsored enterprises from encroaching on the business activities of lenders. The Mortgage Bankers Association supports the test. But opponents contend that it would allow the regulator to roll back existing GSE products and services and make "wholesale changes" to established "GSE-lender business relations," according to a letter from 35 mortgage lenders to committee leaders. The signers include nationwide lenders such as Countrywide Financial Corp., regional lenders, and a cooperative of independent mortgage bankers, Lenders One. Rep. Barney Frank, D-Mass, is expected to offer the amendment to strip the bright-line test from the bill. A close vote is expected.