The Mortgage Bankers Association (MBA) plans to challenge a proposal that requires originators to have "skin in the game" when it testifies Thursday on Rep. Barney Frank's legislation to curb predatory lending practices.
The bill, H.R. 1728, by the chairman of the House Financial Services Committee would require lenders to retain a minimum 5% economic interest in loans they sell on the secondary market. Such a provision would be a "huge call on capital," MBA president John Courson told reporters at the group's National Secondary Market Conference in Chicago. He said that it is unclear whether the Massachusetts Democrat means 5% of the loan amount, a 5% loan cap, a 5% share of the total loss, or 5% of the first loss.
But anyway you look it, he said, the requirement represents a "total change of the landscape." Calling the proviso "premature," Courson said it "seem to be totally out of place with this particular piece of legislation" and should be debated as part of the discussion expected later this year to totally restructure the secondary market. "We will urge as aggressively as we can that this does not belong as part of an anti-predatory lending bill," the MBA president said.
