House Financial Services Committee chairman Barney Frank, D-Mass., is asking Senate conferees to drop a "qualified" mortgage exemption that would allow nongovernment loans to be securitized without risk retention.

In reconciling the House and Senate financial services regulatory reform bills, Rep. Frank is offering to totally exempt Federal Housing Administration, Department of Veterans Affairs, and Rural Housing Service guaranteed loans from a 5% risk retention requirement for MBS issuers. However, issuers of Fannie Mae and Freddie Mac MBS would have to retain 5% of the credit risk under the Frank proposal.

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